Business Contracts

Prior to the introduction of Article 1124 of the Civil Code by the reform of contract law, the courts considered that as long as the beneficiary had not declared his acquisition by exercising the option, the promisor's obligation to sell constituted no more than an obligation to do, subject to settlement in damages, so that the exercise of the option, subsequent to the latter's withdrawal, exclude …

Sanction for breach

Prior to the introduction of Article 1124 of the Civil Code by the reform of contract law, the courts considered that as long as the beneficiary had not declared his acquisition by exercising the option, the promisor's obligation to sell constituted no more than an obligation to do, subject to settlement in damages, so that the exercise of the option, subsequent to the latter's withdrawal, excluded any meeting of the mutual intentions to sell and acquire, and hence any specific performance of the sale . In other words, the courts accepted that the promisor could revoke his commitment to sell within the time-limit granted to the beneficiary to decide whether or not to purchase .

The aims of the reform of contract law are quite  different from those pusued traditionally by case law. Instead of referring to the “ withdrawal of the promisor ” in paragraph 2 of Article 1124, the term unilateral “ withdrawal of the promise ” is used to underline the fact that the promise agreement is validly formed by the mere meeting of the promisor's offer to sell and the beneficiary's acceptance of his right to exercise the option, independently of the exercise of the option per se. In other words, by entering into the promise, the promisor consents to both the promise and the sale, while the beneficiary consents only to the right to opt (or not) for the conclusion of the planned agreement. By entering into the promise agreement, the promisor is definitively and irrevocably bound, so that in the event of non-performance, he or she must be required to honor the agreement. The Court of Cassation amended its position accordingly, first on the occasion of a priority question of constitutionality to the Constitutional Council (question prioritaire de constitutionnalité) concerning the provisions of paragraph 2 of Article 1124 of the Civil Code, which it refused to address, noting that the formation of the promised agreement, despite the revocation of the promise during the time left to the beneficiary to opt out, does not breach the freedom of contract and does not constitute a deprivation of the right of ownership . It subsequently confirmed its position on several occasions, applying the new law in advance to promises entered into prior to the reform of contract law, which  was met with a certain amount of criticism . Finally, in a decision dated 15 March 2023, the Commercial Chamber of the Court of Cassation justified this anticipatory application of the new law by stating that “if, in accordance with Article 9 thereof, the provisions of the Ordinance of 10 February 2016 are only applicable to agreements entered into after its entry into force, it appears necessary, “in view of developments in the law of obligations”, to amend the Court's case law to hold [.... ] that a promisor who signs a unilateral promise to sell is definitively bound to sell from the time of the promise, and may not withdraw, even before the opening of the option time-limit offered to the beneficiary, unless otherwise stipulated” . The Court of Appeal in Angers has clarified that this reversal of case law by the Court of Cassation, which ensures the full effect of the commitment made by the promisor by strengthening the legal certainty of the parties to the deed and aims to substitute one sanction for another in the event of withdrawal of the promise, does not constitute an excessive infringement of the rights of the promisor, who has never been recognized as having a free right to withdraw, by merely requiring him to honor his word through specific performance of the transfer rather than compensating for non-performance with damages that are difficult to assess .

Cass. 3e civ, 15 December 1993, LawLex202300002503JBJ; see also Cass. 3e civ, 11 May 2011, LawLex202100005974JBJ; Cass. 3e civ, 15 December 1993, LawLex202300002503JBJ; see also Cass. 3e civ, 11 May 2011, LawLex202100005974JBJ.

Cass. com. 13 September 2011, LawLex202300004036JBJ; 14 January 2014, LawLex202300003492JBJ.

Cass. 3e civ, 17 October 2019, LawLex202100005983JBJ, ruling that there is no reason to refer to the Conseil constitutionnel the priority question of constitutionality relating to whether the provisions of paragraph 2 of article 1124 of the Civil Code are contrary to the principle of freedom of contract arising from article 4 of the Declaration of the Rights of Man and of the Citizen of 1789 and/or to the right of ownership guaranteed by Article 17 of the Declaration of the Rights of Man and of the Citizen of 1789 since, since it does not concern the interpretation of a constitutional provision which the Conseil constitutionnel has not yet had occasion to apply, the question posed is not new.

Cass. 3e civ, 23 June 2021, LawLex202100006113JBJ, holding that under former Articles 1101 and 1134 of the Civil Code, as long as the beneficiaries of a unilateral promise of sale had not made a declaration of purchase, the promisor's obligation was no more than an obligation to perform, the breach of which could only give rise to a claim for damages, so that the exercise of the option, subsequent to the promisor's withdrawal, excluded any concurrence of wills, precluded any meeting of reciprocal wills to sell and to acquire, and hence any forced completion of the sale, as the law stands, a unilateral promise to sell, unlike a simple offer to sell, is a pre-contract, which definitively obliges the promisor to sell as soon as the pre-contract is concluded, without the possibility of withdrawal, unless otherwise stipulated. 

Cass. 3e civ, 15 March 2023, LawLex202300004003JBJ.

CA Angers, 2 April 2024, LawLex202400002932JBJ.

Business Contracts

74. Sanction for breach

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74. Sanction for breach

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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