Business Contracts

Sometimes, the beneficiary may choose to nominate a third party, provided this is stipulated in the unilateral promise to sell. Once the substitution has taken place, the beneficiary can no longer exercise his option right. Thus, a substituted party who has exercised the option under a unilateral promise to sell a property and completed the sale can no longer substitute him or herself for the orig …

Substitution

Sometimes, the beneficiary may choose to nominate a third party, provided this is stipulated in the unilateral promise to sell. Once the substitution has taken place, the beneficiary can no longer exercise his option right. Thus, a substituted party who has exercised the option under a unilateral promise to sell a property and completed the sale can no longer substitute him or herself for the original beneficiaries of the promise which, by the effect of the exercise of the option, has ceased to exist . On the other hand, the beneficiary of a unilateral promise to sell, even after having used the option to substitute another person who has not exercised the option, may do so himself, provided that the option deadline has not expired and that the substituted beneficiary had retracted his acceptance .

According to case law, the fact that the beneficiary of a promise to sell has appointed a third party as his substitute does not constitute an assignment of a debt . Consequently, substitution does not require the formalities set out in Article 1690 of the Civil Code  which, prior to the reform of contract law, were required by courts to render an assignment enforceable against third parties. The Civil Code now devotes a section to the transfer of contracts. Article 1216, paragraph 2, stipulates that the transfer takes effect vis-à-vis the transferee when the agreement between the transferor and the transferee is notified to him or when he duly acknowledges it. In addition, under Article 1216, paragraph 3 of the Civil Code, any assignment of an agreement must be in writing, or is invalid. As the law stands, these new provisions do not apply to a unilateral promise of sale with a right of substitution, since the substitution of a third party for the beneficiary does not constitute an assignment of a claim. However, the draft reform of the law of special contracts provides for a departure from case law, in new Article 1591, which will stipulate that “the exercise [of an option of substitution] carries the effects of an assignment of the agreement of promise”.

Cass. 3e civ. 19 December 2001, LawLex202300002776JBJ.

Cass. 3e civ, 27 April 1988, LawLex202100006456JBJ.

Cass. 3e civ, 1 April 1987, LawLex202100006457JBJ; 13 July 1999, LawLex202100006427JBJ.

Art. 1690 Civil Code: "The transferee is vested with regard to third parties only by notification of the assignment made to the debtor.

However, the transferee may also be bound by the acceptance of the assignment by the debtor in an authenticated deed".

Business Contracts

85. Substitution

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

85. Substitution

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise