Commercial Leases/Business Goodwill

Certain clauses condition the transfer of the leasehold right on the parties' compliance with certain conditions. These clauses are valid. This is the case for the clause that prohibits the lessee from transferring their leasehold right as long as they are not current on the rent due up to the date of the transfer. If, contrary to the lease stipulations, the lessee has not paid all the rent due by the date of the transfer, the transfer is irregular, and the lessee risks termination of the lease, even if all formalities related to the transfer, as provided in the lease, have been complied with .

Similarly, a clause in the lease may obligate the tenants to continue the concession contract previously concluded by the lessor and stipulate that “in the event of termination of this contract, for any reason whatsoever, whether attributable to the tenants or not, the lease will be purely and simply terminated without any compensation.” As long as such a clause determines the tenant's obligations without hindering the continuation of the business under the same conditions, by them or their successor, beyond the term provided for the lease, it does not have the effect of prohibiting the tenant from assigning their lease to the purchaser of their business .

The lease may also stipulate that in all cases, subsequent assignments must be made by authentic instrument to which the lessor will be summoned, and of which an engrossment must be delivered to him at no cost. It has been held that the violation of this clause is sufficiently serious to justify the termination of the lease when the assignment of the lease by private deed, instead of being formalized by authentic instrument, deprives the lessor of a direct enforceable title against the lessee . The Paris Court of Appeal further specified that the lessor's tacit waiver of the requirement to comply with the formal rules provided in the lease contract cannot result from his acceptance of two previous assignments by private deed, as the lessor's tolerance does not create a right .

Finally, the lease may authorize the transfer for the operation of all businesses, without restriction. However, the Court of Cassation has held that this clause is not applicable if the assignee of the lease does not engage in any commercial activity. Indeed, it cannot be implemented, for example, for the benefit of a cooperative agricultural credit fund with a mutualist form, which is a civil company, whose non-profit operations do not fall under banking commerce, as it does not aim to make profits through speculation on money and credit .

Cass. 3e civ., 31 May 1994, LawLex202300013636JBJ.

Cass. 3e civ., 22 July 1987, LawLex202300010114JBJ.

CA Paris, 3 November 1992, LawLex202300013698JBJ; Cass. 3rd civ., 13 March 2025, LawLex202500001773JBJ.

CA Paris, 3 November 1992, LawLex202300013698JBJ.

Cass. 3e civ., 26 January 1982, LawLex202300009752JBJ.

301. Limitation clauses