Commercial Leases/Business Goodwill

Under the terms of Article 425 of the Civil Code, “any person who is unable to provide for their own interests due to a medically confirmed impairment, either of their mental faculties or of their physical faculties preventing the expression of their will,” may benefit from a legal protection measure. The Civil Code provides for three legal protection regimes to which an incapacitated adult may be …

Protected adult

Under the terms of Article 425 of the Civil Code, “any person who is unable to provide for their own interests due to a medically confirmed impairment, either of their mental faculties or of their physical faculties preventing the expression of their will,” may benefit from a legal protection measure. The Civil Code provides for three legal protection regimes to which an incapacitated adult may be subject: guardianship, curatorship, and judicial protection, in addition to other lesser protection measures such as family authorization and the future protection mandate. The protection of the incapacitated adult and their ability to perform legal acts vary depending on the applicable regime.

According to Article 440, para. 3, of the Civil Code, a person who, for one of the reasons provided for in Article 425, must be continuously represented in civil life acts, may be placed under guardianship. This is the strongest protective measure as it “is only pronounced if it is established that neither judicial protection nor curatorship can provide sufficient protection” . A guardian is then appointed by the judge  to represent the adult with total incapacity, particularly in acts necessary for the management of their assets . The conclusion of a commercial lease is considered a disposition act within the meaning of Decree No 2008-1484 of 22 December 2008 , and the guardian may, with the authorization of the family council or, failing that, the judge, execute such an act on behalf of the protected person .

In the case of a commercial lease concluded irregularly, it is essential to distinguish whether its conclusion occurred before or after the publication of the judgment opening the guardianship.

When the lease was concluded by the protected adult less than two years before the publication of the judgment, the resulting obligations may be reduced, according to Article 464, para. 1, of the Civil Code, “upon the sole proof that his inability to defend his interests, due to the impairment of his personal faculties, was notorious or known to the co-contractor” at the date of conclusion of the lease, which may be annulled “if harm suffered by the protected person is proven” . Para. 3 of Article 464 specifies that “the action must be brought within five years from the date of the judgment opening the measure.”

From the publication of the judgment opening the guardianship, if the protected person has entered into a commercial lease alone, for which they should have been represented by the guardian, Article 465, 3° of the Civil Code states that “the act is null and void without the need to justify any harm.” The action for nullity may be initiated by the guardian alone, with the agreement of the judge or the family council , during the duration of the guardianship . It expires after a period of five years . If the guardian enters into a lease alone, without the authorization of the judge or the family council, Article 465, 4° specifies that “the act is null and void without the need to justify any harm,” unless, within a period of five years and while the protection measure is open, the lease is confirmed by one of the two aforementioned entities .

If the commercial lease, granted by the guardian during the guardianship protection period and not subject to any annulment request, is valid, it does not confer on the lessee, with respect to the protected adult, according to paragraph 3 of Article 504 of the Civil Code, “any right of renewal and any right to remain in the premises upon expiration of the lease.” The Court of Cassation considers that no exception can be made to the rule on the grounds that the lessee contracted under the mistaken belief that the guardian was the owner of the leased premises . Finally, when the lease is granted for a period exceeding nine years by the guardian, it is unenforceable against the protected person who has become capable, the lease being enforceable against them only for a period not exceeding nine years from its conclusion .

Under the terms of Article 440, para. 1, of the Civil Code, “a person who, without being unable to act themselves, needs, for one of the reasons provided for in Article 425, to be assisted or supervised continuously in important acts of civil life, may be placed under curatorship,” with a curator being appointed by the judge for this purpose . This protective measure, legally less restrictive than guardianship, “is only pronounced if it is established that judicial protection cannot provide sufficient protection” .

Article 467, para. 1, of the Civil Code establishes the principle that “a person under curatorship cannot, without the assistance of the curator, perform any act which, in the case of guardianship, would require authorization from the judge or the family council,” which refers to Article 505, para. 1, of the same code concerning acts of disposition . Therefore, the protected person must be assisted by the curator to consent to a commercial lease.

When the commercial lease was granted irregularly, it is also necessary to determine whether it commenced before or after the publication of the judgment opening the guardianship.

When a lease has been concluded by the protected adult less than two years before the publication of the judgment, the rule applicable is identical to guardianship .

From the publication of the judgment opening the guardianship, if the protected person has entered into a lease alone for which they should have been assisted by the curator, Article 465, 2° of the Civil Code states that “the act can only be annulled if it is established that the protected person has suffered harm,” the action for annulment, which expires after a period of five years , may be initiated by the curator alone, with the agreement of the judge or the family council . If the curator alone enters into a commercial lease that should have been granted by the protected person with their assistance, Article 465, 4° specifies that “the act is null and void without the need to justify harm,” the lease may, however, be confirmed by the judge or the family council .

If no request for annulment has been made, the commercial lease granted by the protected adult, without the curator's assistance, remains valid, but the lessee has no right to renewal or to remain in the leased premises, with the maximum duration set at nine years. However, it is possible for the protected person to override the curator's refusal of assistance when required, by requesting authorization from the judge to perform it alone .

The judge may subject a person to this protective measure who, “for one of the reasons provided for in Article 425, needs temporary legal protection or representation for the performance of certain specified acts” . A flexible protective measure, judicial protection allows the protected person to retain the exercise of their rights. However, “they cannot, under penalty of nullity, perform an act for which a special representative has been appointed” . Therefore, they may freely consent to a commercial lease, unless the execution of such an act has been entrusted to a special representative.

Under paragraph 2 of Article 435 of the Civil Code, the lease granted by the protected person during the duration of the measure may be rescinded for mere lesion or reduced in case of excess, or even annulled for insanity pursuant to Article 414-1 of the same code. Paragraph 2 specifies that judges take into consideration “the usefulness or uselessness of the operation, the importance or consistency of the protected person's assets, and the good or bad faith of those with whom they contracted.” The action for annulment, rescission, or reduction belongs only to the protected person and is extinguished after five years . When the person concerned acts for annulment due to insanity, it is up to them to prove the existence of a mental disorder at the time of signing the lease .

The mandate for future protection, governed by Articles 477 et seq. of the Civil Code, allows any adult “not subject to guardianship or family authorization, to appoint one or more persons, through a single mandate, to represent them in the event that, for one of the reasons provided for in Article 425, they can no longer manage their interests alone” . Such a mandate is concluded by notarial act or by private deed . When the form of the mandate is notarial, even if it is drafted in general terms, the agent may consent to a commercial lease . Conversely, when the mandate is by private deed, it is “limited, in terms of asset management, to acts that a guardian can perform without authorization” , and the commercial lease concluded by the agent does not confer any right to renewal of the lease or any right to remain in the rented premises.

Ordinance No 2015-1288 of 15 October 2015 established family empowerment which, under Articles 494-1 et seq. of the Civil Code, is intended to protect a person who is unable to manage their own interests due to a medically certified impairment, either of their mental faculties or of their physical faculties, preventing the expression of their will. Thus, the guardianship judge may empower one or more persons, chosen from among the relatives of the person to be protected, to represent them, assist them, or execute one or more acts on their behalf, to safeguard their interests . According to Article 494-6, para. 1, of the Civil Code, “the empowerment may cover one or more of the acts that the guardian has the power to perform, alone or with authorization, concerning the assets of the person concerned.” The empowered person may, therefore, enter into a commercial lease on behalf of the protected person under the same conditions as the guardian. Article 494-9 of the Civil Code specifies that “if the person for whom the empowerment has been granted performs alone an act whose execution has been entrusted to the empowered person, it is null and void without the need to demonstrate any harm.”

Cass. 1re civ., 14 May 1996, LawLe202100002687JBJ.

Art. 1718 Civil Code and, by reference, Art. 595 Civil Code.

As a reminder, the conclusion of a commercial lease is an act of disposition. – Decree No 2008-1484 of 22 December 2008, Art. 1 and Annex 1, col. 2-I.

Decree No 2008-1484 of 22 December 2008 relating to the management acts of the assets of persons placed under curatorship or guardianship, and adopted pursuant to Articles 452, 496, and 502 of the Civil Code, Art. 1 and Annex 1, col. 2-I.

Cass. civ. 1re, 31 January 1995, LawLex202100002682JBJ, according to which the action for annulment of an act can only be exercised by the guardian during the guardianship, by the author of the act after the lifting of the protection measure, and by their heirs after their death, with the judges de facto excluding this option granted to the purchaser of the property, subject of the lease, which belonged to the protected person on the day of the act.

Commercial Leases/Business Goodwill

69. Protected adult

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

69. Protected adult

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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