Business Contracts

The beneficiary of a unilateral promise to sell is free to decide whether or not to consent to the sale by exercising the option. Abandonment of the option right cannot therefore be held against the beneficiary, nor can it give rise to a right to compensation for the promisor. The Court of Cassation reiterates this principle when it states that the beneficiary of a unilateral promise to sell commi …

Waiver of the option right

The beneficiary of a unilateral promise to sell is free to decide whether or not to consent to the sale by exercising the option. Abandonment of the option right cannot therefore be held against the beneficiary, nor can it give rise to a right to compensation for the promisor. The Court of Cassation reiterates this principle when it states that the beneficiary of a unilateral promise to sell commits no fault by refusing to purchase the property .

The option granted to the beneficiary by the promisor is often for valuable consideration. In this case, the unilateral promise to sell stipulates the payment of an “ indemnité d'immobilisation”  (non refundable deposit)  generally representing 10% of the sale price, payable on conclusion of the promise, or on expiry of the option time-limit. If the beneficiary exercises the option, the indemnity constitutes an advance on the purchase price; otherwise, it remains payable to the promisor, unless otherwise stipulated. Payment of the indemnity, or recovery of the sum already paid in respect of this indemnity , can be a litigious matter.

The Court of Cassation considers that the “immobilization indemnity” stipulated in a unilateral promise to sell, as acquired by the promisor in the event of failure to execute the sale, constitutes the price of the exclusivity granted to the beneficiary of the promise . In this ruling, the Court of Cassation set aside an appeal court ruling which, in rejecting the claim for payment of such an indemnity, had considered that this indemnity was fixed on the basis of the possible harm arising from the need for the promisors to find another buyer, a harm which they did not suffer since they renounced the sale. The preliminary draft of the law on special contracts endorses this judicial approach, without however using the term “indemnity”, deemed inappropriate, as it refers to the notion of harm, by providing, in the future Article 1590, that “a sum may be agreed in the unilateral promise of sale, in return for the exclusivity granted to the beneficiary”, that “it is acquired by the promisor if the beneficiary chooses not to purchase” and that “in the event of conclusion of the sale, this sum is equivalent to a deposit, unless otherwise agreed”.

The beneficiary of a unilateral promise of sale including an immobilization indemnity is therefore required to pay this indemnity to the promisor if he renounces the acquisition while all the suspensive conditions are fulfilled, the fact that he withdrew before the expiration date of the promise having no effect . In the event of failure of the suspensive condition, it is incumbent upon him to prove that he carried out all due diligence to implement the suspensive condition stipulated in the promise of sale, it being understood that if he provides such proof, it is for the promisor, who seeks payment of the immobilization indemnity, to demonstrate that the beneficiary prevented the fulfillment of the condition .

The immobilization indemnity stipulated in a unilateral promise to sell can also be set by the parties according to the length of time the property is immobilized , and can therefore be reduced by the courts if the beneficiary of the promise renounces the sale in advance . According to the Court of Cassation, the stipulation of an immobilization indemnity for the benefit of the promisor does not constitute a penalty clause, since the beneficiary of a unilateral promise of sale is not obliged to purchase . In addition, the sum paid by the beneficiary of a promise to sell a building to extend the option time-limit granted to him, and which is added to an immobilization indemnity equal to 10% of the price, does not constitute a penalty clause either, since he has made no commitment to acquire the building and this clause is not intended to ensure performance of the agreement .

The beneficiary of a unilateral promise of sale including an immobilization indemnity is therefore required to pay this indemnity to the promisor if he renounces the acquisition while all the suspensive conditions are fulfilled, the fact that he withdrew before the expiration date of the promise having no effect. In the event of failure of the suspensive condition, it is incumbent upon him to prove that he carried out all due diligence to implement the suspensive condition stipulated in the promise of sale, it being understood that if he provides such proof, it is for the promisor, who seeks payment of the immobilization indemnity, to demonstrate that the beneficiary prevented the fulfillment of the condition.

Cass. 3e civ. 26 September 2012, LawLex202300002087JBJ.

Cass. 3e civ, 1 July 1998, LawLex202100006428JBJ, ruling that the beneficiary company of a promise of sale for a building plot, which has paid an indemnité d'immobilisation, may nonetheless withdraw from the sale and have its indemnité returned, even if it was stipulated in the deed that it would be retained by the promisor in the event of failure to perform attributable to the beneficiary, when the land in question is encumbered by a servitude not specified in the deed, which materially affects its use, even though the promisor had declared that there was no private or public servitude preventing the grant of the building permit.

Cass. 1re civ., 5 December 1995, LawLex202200000592JBJ

CA Bordeaux, 6 June 2024, LawLex202400004281JBJ.

CA Paris, 24 May 2024, LawLex202400004413JBJ. See also CA Versailles, 8 February 2024, LawLex202400001886JBJ.

CA Rennes, 22 May 2024, LawLex202400004414JBJ.

Cass. 3e civ. 5 December 1984, LawLex202200001070JBJ.

Cass. 3e civ, 5 December 1984, LawLex202200001070JBJ, supra. But see Cass. 3e civ. 24 September 2008, LawLex202100006453JBJ, holding that a stipulation, even if improperly described as an immobilization indemnity, the purpose of which is to ensure that the purchaser fulfills his obligation of diligence, constitutes a penalty clause.

Cass. 3e civ. 5 December 1984, LawLex202200000555JBJ.

Business Contracts

82. Waiver of the option right

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

82. Waiver of the option right

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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au contenu exclusif Livv – juristes d’entreprise