Business Contracts

As a pre-contract, the pre-emption agreement must meet certain conditions of validity, both in terms of form and substance. Like any agreement, it arises from the meeting of an offer and an acceptance. The parties' consent must therefore be free and informed, and not vitiated, at the time of conclusion.
On the other hand, unlike a promise to sell, a pre-emption agreement is not a binding commitmen …

Conditions of validity

As a pre-contract, the pre-emption agreement must meet certain conditions of validity, both in terms of form and substance. Like any agreement, it arises from the meeting of an offer and an acceptance. The parties' consent must therefore be free and informed, and not vitiated, at the time of conclusion.

On the other hand, unlike a promise to sell, a pre-emption agreement is not a binding commitment to sell: if the promisor decides not to sell, he is under no obligation to offer the preference to the beneficiary. After some hesitation , the Court of Cassation therefore concluded that it did not constitute a restriction on the right of disposal . Consequently, the validity of a pre-emption agreement requires neither the power nor the capacity of the promisor to dispose of his property.

The pre-emption agreement must specify the subject matter. However, the price and terms of the eventual sale do not have to be fixed as in a promise to sell. This solution is justified, according to the Court of Cassation, because it is not in the nature of a pre-emption agreement to predetermine the price of the agreement in question, which will only be concluded at a later date if the promisor so decides, so that the promisor retains the freedom to set the conditions and price of the envisaged transfer . However, the parties may validly stipulate otherwise in the agreement, and set the price in advance. For example, a pre-emption agreement for a period of twenty years, providing for a predetermined sale price, does not constitute an infringement of the right of ownership, provided that the stipulation was freely agreed between the parties and was intended to prevent speculation on the property in a context marked by a scarcity of supply and the “ disengagement ” of the financial possibilities of most households in relation to the surge in property prices . However, when the parties decide to predetermine the price and this stipulation is found to be invalid, the validity of the pre-emption agreement may be called into question. Thus, when the pre-emption agreement grants the beneficiary the right to acquire the shares offered for sale at a price to be determined by a third party, with the result that the transferor has lost the freedom to determine the sale price himself, and the arbitrator is unable to set the price in the absence of predetermined valuation criteria, the invalidity of the price-setting stipulation affects the entire pre-emption agreement .

Furthermore, the validity of a pre-emption agreement cannot depend on the stipulation of a specific timeframe . Consequently, according to the Court of Cassation, a court of appeal cannot declare invalid a clause which stipulates a right of preference, not limited in time, without stipulating a price, on the grounds that such an obligation is purely potestative, whereas, in order for the obligation to be invalid  - the potestative condition must apply to the party making binding commitment - and this is in fact not the case of the promisor, who does not undertake to sell under a pre-emption agreement, - and that, furthermore, the predetermination of the price of the agreement envisaged and the stipulation of a time-limit are not conditions for the validity of the pre-emption agreement .

Lastly, the validity of a pre-emption agreement is not subject to any formal requirements.

Although the Court of Cassation initially considered that a pre-emption agreement should be subject to land registration when it relates to real estate , it has now reversed its position. Thus, the Court ruled that a pre-emption agreement does not constitute a restriction on the right of disposal, which is subject to the compulsory registration requirement laid down in Article 28-2 of the Decree of 4 January 1955 In addition, a pre-emption agreement does not have to comply with the registration requirement laid down in Article 1589-2 of the Civil Code, which only applies to unilateral promises of sale, on pain of invalidity, under Article 1589-2 of the Civil Code .

Initially, the Court of Cassation characterized the pre-emption agreement for the sale of real estate as a restriction on the right of disposal (Cass. 3e civ., March 4, 1971, LawLex202300006354JBJ), unlike the pre-emption agreement for the lease of real estate (Cass. 3e civ., March 13, 1979, LawLex202200000614JBJ), before aligning the regime of the former with the latter in its decision of 16 March 1994.

Cass. 3e civ, 16 March 1994, LawLex202200000348JBJ.

Cass. 1st civ. 6th June 2001, LawLex202200000611JBJ. See also. Cass. 3e civ, 15 January 2003, LawLex202200000349JBJ.

Cass. 3e civ. 23 September 2009, No 08-18.187.

Cass. com. 6 November 2012, LawLex202200000350JBJ.

Cass. 1re civ. 6 June 2001, LawLex202200000611JBJ, adding that there is no need as a result to consider whether the pre-emption agreement has lapsed.

Cass. 3e civ, 15 January 2003, LawLex202200000349JBJ.

Cass. 3e civ. 4 March 1971, LawLex202300006354JBJ.

Art. 1589-2 Civil Code: “Any unilateral promise of sale relating to an immovable, a right in immovable property, a business, a right to a lease relating to all or part of an immovable property, or to shares in the companies referred to in Articles 728 and 1655 ter of the General Tax Code, is null and of no effect if it is not recorded in a notarial deed or in a private deed registered within a period of ten days from the date of its acceptance by the beneficiary. The same applies to any transfer relating to such promises which has not been the subject of a notarial deed or a private deed registered within ten days of its date”.

Business Contracts

102. Conditions of validity

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

102. Conditions of validity

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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