Business Contracts

The pre-emption agreement is an original institution. Under this pre-contract, the promisor undertakes to grant a right of first refusal to the beneficiary, should he decide to sell his property, but remains free to decide not to sell. Article 1123 of the Civil Code states: “A pre-emption agreement is an agreement by which a party undertakes to offer its beneficiary a priority right to contract wi …

Definition

The pre-emption agreement is an original institution. Under this pre-contract, the promisor undertakes to grant a right of first refusal to the beneficiary, should he decide to sell his property, but remains free to decide not to sell. Article 1123 of the Civil Code states: “A pre-emption agreement is an agreement by which a party undertakes to offer its beneficiary a priority right to contract with it, should the latter decide to do so”.

Unlike a promise to sell, which is binding on both parties from the moment it is entered into (in the case of a bilateral promise), or only on the promisor (in the case of a unilateral promise), a pre-emption agreement is only binding if the promisor decides to sell. Thus, according to the Court of Cassation, the agreement by which the promisor grants the beneficiary not a simple option in the event that he decides to sell, but undertakes to sell on condition that the asking price is paid in cash on the day of execution of the deed, and that the beneficiary has made known his intention to acquire before a certain date, constitutes not a pre-emption agreement, but a promise to sell .

Initially, the Court held that a pre-emption agreement amounted to a conditional unilateral promise . However, this comparison has its limits, because by entering into a pre-emption agreement, the promisor does not undertake to enter into a contract of sale with the beneficiary, but only to offer the latter the right of first refusal in the event of a sale .

The Court of Cassation then confirmed that a pre-emption agreement implies an obligation on the part of the promisor to give preference to the beneficiary when he or she decides to sell the property  , and to inform him or her of the specific conditions of the sale before it is completed . A clause in a contract of sale by which the purchasers of an immovable agree to offer it for sale to the vendor's two grandchildren, when the last of them reaches the age of majority, does not constitute a pre-emption agreement, but a purely potestative condition, without any price being fixed . Furthermore, a pre-emption agreement constitutes neither an agreement that infringes on the freedom of a third party to exercise his profession, trade or industry, nor an agreement by which a person undertakes to refrain from exercising a defined activity in a manner that is unlimited in space and time .

Cass. 1re civ., 27 February 1963, LawLex202300006279JBJ.

Cass. 3e civ. 13 March 1979, LawLex202200000614JBJ; 16 March 1994, LawLex202200000348JBJ.

In addition, unlike the promise, the validity of a pre-emption agreement requires neither the power nor the capacity of the promisor to dispose of his property.

Cass. 3e civ., 6 December 2018, LawLex202200001076JBJ.

Cass. com. 16 February 2022, LawLex202300006333JBJ.

Cass. 3e civ. 1 February 1984, LawLex202200001076JBJ.

Cass. com. 4 February 1970, LawLex202300006290JBJ.

Business Contracts

101. Definition

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101. Definition

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