Business Contracts

The beneficiary's consent to the sale, by exercising the option, must in principle be given within the time-limit stipulated in the promise, unless it has been extended by agreement. Consequently, a court of appeal cannot, without violating the agreement of the parties, hold that the exercise of the option, which took place outside the time-limit, was carried out in accordance with the requirement …

Time-limit

The beneficiary's consent to the sale, by exercising the option, must in principle be given within the time-limit stipulated in the promise, unless it has been extended by agreement. Consequently, a court of appeal cannot, without violating the agreement of the parties, hold that the exercise of the option, which took place outside the time-limit, was carried out in accordance with the requirements of the unilateral promise in question, on the grounds that the promisor had agreed to an extension of the option time-limit, whereas the preliminary agreement only provided for a contractual extension in the event that the promisor had not sent the beneficiary the documents required to draw up the deed of sale . Similarly, a court of appeal could not hold that the automatic extension clause contained in a unilateral promise to sell could not have the effect of extending the promise beyond a reasonable time-limit, when the said clause stipulated that, if on the date of expiry of the promise, the beneficiary's notary had not received the title deeds and co-ownership by-laws, the duration of the promise would be automatically extended to expire ten days after the date on which the last of these documents was delivered .

In some cases, the exercise of the option is subject to the fulfillment of a condition before a given date. Thus, when a unilateral promise to sell stipulates that the option must be exercised within one month of the implementation of the suspensive conditions, unless the seller waives entitlement to them, the sale cannot be completed before the date fixed .

Although unilateral promises to sell generally stipulate an expiry date, in exceptional cases the parties may have made no such provision. Given the fact that it is prohibited to give commitments in perpetuity , the option must then be exercised within a reasonable time .  The Court of Cassation accordingly held that, despite the absence of a fixed term to the promise, the real intention of the promisors could not be to commit themselves on a perpetual basis to transfer the majority of their undertaking's capital to the beneficiary at a price devoid of any indexation mechanism and it must be assumed that the parties had the common intention of setting a reasonable time-limit for the exercise of the option, and that, given the circumstances, the unilateral promise of sale lapses where the beneficiary exercises the option more than eleven years and four months after the date of acceptance of the promise . Furthermore, according to the Court, where no deadline has been stipulated for exercising the option in the unilateral promise of sale, the promisor cannot retract that commitment without first giving formal notice to the beneficiary to accept or refuse the purchase of the property within a specified period, or without proving that he has waived his right to enforce the promise .

Cass. 3e civ., 8 October 2003, LawLex202100006108JBJ.

Cass. 3e civ, 17 July 1997, LawLex202100006455JBJ.

Cass. 3e civ, 24 February 1999, LawLex202200000123JBJ.

Art. 1210 Civil Code: "Perpetual commitments are prohibited.

Either contracting party may terminate them under the conditions laid down for open-ended agreements".

The preliminary draft reform of the law of special contracts expresses this view, when it provides in forthcoming Article 1589 that “if the duration of the unilateral promise is undefined, the promisor may terminate it only after having given the beneficiary formal notice to exercise the option within a reasonable time-limit, which he shall fix himself”.

Cass. com. 27 January 2021, LawLex202300004465JBJ. Cf. Cass. com, 26 January 1993, LawLex202200002479JBJ, holding that when the partner of a limited liability company (SARL), having signed a promise to sell shares for an unspecified period, to the benefit of a co-partner, clearly expressed the intention not to follow through on what, owing to confusion, she believed to be a blank transfer of shares, without provoking any reaction on the part of the beneficiary, who did not respond either to the letter in which, one month later, she informed him that she would not follow through on any commitment that would deprive her of her rights, the beneficiary's silence for almost two years - at the end of which he exercised the option - must be considered as evidence that he accepted the promisor's position and waived his right to rely on the promise.

Cass. 3e civ, 24 April 1970, LawLex202300005510JBJ.

Business Contracts

78. Time-limit

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

78. Time-limit

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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