Commercial Leases/Business Goodwill

If the lessor is obliged, by the nature of the lease contract, and without the need for any particular stipulation, to ensure the lessee's peaceful enjoyment of the leased property throughout the duration of the lease , Article 1724 of the Civil Code reserves the right for the lessor to carry out urgent repairs on the leased premises. Paragraph 1 provides that “if, during the lease, the leased property requires urgent repairs that cannot be postponed until its end, the lessee must endure them, regardless of the inconvenience they cause, and even if they are deprived, while they are being carried out, of part of the leased property.” However, paragraph 2 imposes a limit whereby “if these repairs last more than twenty-one days, the rent will be reduced in proportion to the time and the part of the leased property of which they have been deprived.” Prior to Law No 2014-366 of 24 March 2014, which amended it , this period was set at forty days. If the repairs are such that they render the leased premises unusable, the lessee has the option to terminate the lease . The lessee may, in principle, oppose repairs that are neither urgent nor necessary for maintaining the premises in normal condition and do not bring any real improvement . They may also contest their poor execution and obtain compensation in case of negligence in the conduct of the work .

The parties may derogate from the provisions of Article 1724 of the Civil Code by a so-called hardship clause, under which “the lessee shall endure, regardless of the inconvenience they cause, the works, repairs, reconstructions, elevations, and any works that will be carried out in the building without being able to claim any compensation or reduction in rent, regardless of their importance and duration, and, by derogation from Article 1724, even if the latter exceeds forty days” , or under which “the lessee must endure, for the entire duration of the lease, all the works incumbent on the lessor in the rented premises, even if they become temporarily inaccessible, without being able to claim any compensation or reduction in rent, regardless of the duration, even if it exceeds forty days, provided they are carried out without interruption, except in the case of force majeure” , or when “the lessee undertakes to bear without compensation, regardless of the duration, all necessary transformations agreed with the lessor” . However, no clause of the lease concerns the total impossibility of using the rented premises due to works, when it stipulates, on the one hand, that the tenant undertakes to endure the works without being able to claim any compensation or reduction in rent, and on the other hand, that they waive any liability claims against the lessor in the event that the premises are destroyed in whole or in part .

The hardship clause is intended to apply only if the inconvenience caused is normal , with the trial court judges having full discretion to assess its extent in light of the tenant's activity. Indeed, a hardship clause cannot lead to exempting the landlord from their obligation to deliver , nor justify excessive inconvenience to the tenant's enjoyment due to the landlord's fault, with the burden of proof resting on the tenant . Thus, the hardship clause may apply when the inconvenience caused by works lasting more than forty days did not force the tenant to cease all activity, since part of it consists of providing services to subsidiaries without requiring the store to be open, and the presence of barriers and scaffolding is not abnormal given the nature of the work carried out .

Furthermore, Article 1723 of the Civil Code, under which the lessor “cannot, during the term of the lease, change the form of the leased property,” imposes a limit on the work that can be carried out, which cannot result in a substantial modification of the leased premises .

Finally, Article L. 145-6 of the Commercial Code allows the landlord, during the term of the initial lease or the renewed lease, to repossess the leased premises in whole or in part to carry out work requiring the tenant to vacate the premises, subject to the conditions set out in Articles L. 313-4 to L. 313-4-2 of the Urban Planning Code, “if he offers to transfer the lease to an equivalent premises in the same building or in another building.” This offer, which must be notified one year in advance, specifies the characteristics of the proposed premises, which must allow the continuation of the tenant's previous business activity. Paragraph 2 of Article L. 145-6 states that the tenant has a period of two months to indicate acceptance or to refer the matter to the competent court, failing which the tenant is deemed to have accepted the offer.

Law No 2014-366 of 24 March 2014 for Access to Housing and Renovated Urban Planning, known as the “ALUR Law,” Art. 1.

Cass. 3e civ., 1 June 2005, LawLex202100003974JBJ. Also see Cass. 3e civ., 6 November 2013, LawLex202100004046JBJ. 

CA Paris, 24 January 2014, LawLex202200009123JBJ. 

Cass. 3e civ., 25 March 2014, LawLex202200009108JBJ, previously cited, in this case, the daily presence of trucks obstructing the tenant's business was not established, and the tenant also claimed to have closed his store several months before the work was carried out.

Cass. 3e civ., 18 July 2001, LawLex202100005546JBJ. 

Cass. 3e civ., 16 April 2008, LawLex202100004036JBJ. 

Cass. 3e civ., 27 November 1974, LawLex202200009097JBJ. 

CA Aix-en-Provence, 10 September 2015, LawLex202200009118JBJ, decision rendered under the law prior to Law No 2014-366 of 24 March 2014.

CA Paris, 24 January 2014, LawLex202200009123JBJ.

Cass. 3e civ., 16 May 2007, LawLex202100004035JBJ.

Cass. 3e civ., 30 November 1994, LawLex202200009100JBJ, for tenants who were unable to occupy the leased premises for a year and a half due to the work undertaken.

Cass. 3e civ., 25 March 2014, LawLex202200009108JBJ.

100. Urgent repair works