Commercial Leases/Business Goodwill

Article 216 of the Civil Code provides that if “each spouse has full legal capacity,” "their rights and powers may be limited by the effect of the matrimonial regime." Thus, the power a spouse has to consent to a commercial lease depends on their matrimonial regime and the nature of the real estate, the subject of the lease.

Articles 1536 and 1569 of the Civil Code, which concern spouses married  …

Spouse

Article 216 of the Civil Code provides that if “each spouse has full legal capacity,” "their rights and powers may be limited by the effect of the matrimonial regime." Thus, the power a spouse has to consent to a commercial lease depends on their matrimonial regime and the nature of the real estate, the subject of the lease.

Articles 1536 and 1569 of the Civil Code, which concern spouses married under the regime of separation of property or participation in acquisitions, refer to Article 225 of the Civil Code, allowing each of them to retain “the administration, enjoyment, and free disposition” of their personal property during the marriage. Thus, each spouse has full authority to grant a commercial lease on property that is their own. The same applies when the lease concerns property owned by each of the spouses married under the community property regime. Indeed, in accordance with Article 1428 of the Civil Code, which also refers to Article 225, “each spouse has the administration and enjoyment” of these and “can dispose of them freely,” which de facto excludes property common to both spouses.

Spouses married under the community property regime cannot, according to Article 1425 of the Civil Code, “without each other, lease a rural property or a building for commercial, industrial, or artisanal use that is part of the community.” Therefore, one spouse cannot alone grant a lease allowing the tenant to use the rented premises for commercial purposes . In the event of judicial liquidation against a debtor married under the community property regime, the wife, who has no more power than her husband in liquidation, cannot grant a lease, even a temporary one, on a community property building .

If the consent of the spouse, to the commercial lease concerning a joint property, can be express or tacit , Article 218 of the Civil Code offers the possibility for one spouse to “grant a mandate to the other to represent them in the exercise of the powers conferred by the matrimonial regime,” provided that this mandate is special .

Article 1427 of the Civil Code allows a spouse to request the annulment of acts performed by the other spouse who has exceeded their powers over the common property. This action for annulment is exclusive of the action for unenforceability provided by Article 1421 of the same code to sanction fraudulent acts, which only applies in the absence of another sanction . It is a relative nullity , which can only be invoked by the spouse who is the victim of the exceeded powers, with neither the at-fault spouse  nor their contracting party  having the standing to exercise this action. The act affected by nullity is deprived of effects not only with respect to the spouse but also in the relations between the at-fault spouse and their contracting party, even if the latter is in good faith . However, the fact that this spouse has performed such an act without the consent of their spouse does not constitute a fault engaging their liability towards their contracting party . Paragraph 2 of Article 1427, which establishes a limitation period , states that “the action for annulment is available to the spouse for two years from the day they became aware of the act, but can never be brought more than two years after the dissolution of the community.” As general as the wording of paragraph 2 may be, it cannot have the effect of depriving the spouse of the right to act for annulment during the two years following the completion of the act, even if it occurred after the dissolution of the community .

When a spouse exceeds their authority by granting a commercial lease on a jointly owned property, the aggrieved spouse can always regularize the act by subsequently ratifying it , which thereafter deprives them of the possibility of seeking its annulment. The ratification by the aggrieved spouse, assessed independently by the judges , can result from any act that unequivocally implies their intention to confirm it .

Finally, Article 1426 of the Civil Code allows one spouse to request in court to be substituted for their partner in the exercise of their powers when the latter is, “in a lasting manner, unable to express their will, or if their management of the community demonstrates incompetence or fraud.” The spouse, authorized by the court, has the same powers as the replaced partner to carry out “the acts for which their consent would have been required if there had been no substitution.” When the transfer of powers is no longer justified, the spouse who was deprived of them may, under the terms of paragraph 3, request their restitution from the court.

Cass. 3e civ., 19 May 1981, LawLex202200002155JBJ, concerning a building dependent on the community; Also see, Bastia, 23 October 2013, LawLex202100002623JBJ, regarding a commercial lease on an undivided building owned by two couples in equal shares, authorized by both husbands, which must also be consented to by both respective wives, the latter being married under the community property regime.

Cass. com., 4 October 2005, LawLex202100001487JBJ.

Cass. 1re civ., 11 January 1983, LawLex202200002181JBJ, according to which the ground based on the two-year limitation period provided by Article 1427, para. 2, of the Civil Code to seek annulment of the act executed by the spouse on a common asset, not invoked before the appellate judges, cannot be supplied ex officio by them.

Cass. 1re civ., 2 June 1981, LawLex202200002182JBJ, regarding a unilateral promise of sale with the option exercised more than two years after the dissolution of the community.

Cass. 1re civ., 17 May 1993, LawLex202100002627JBJ, for a tacit ratification by a wife who remained silent for more than two years regarding a commercial lease granted by her husband, the judges having also noted the personal ties linking the wife to the partners of the company leasing the property, her shared interest with them, as well as her full knowledge of the situation.

Cass. 1re civ., 12 July 1994, LawLex202200002208JBJ.

Cass. 1re civ., 1 February 2017, LawLex202200002156JBJ, in this case, a wife was present at the notarial act by which her husband gave to two of their common children funds from his professional activity without her opposing it, thus characterizing her tacit consent to the donation; See also Limoges, 15 January 2015, LawLex202100002624JBJ: the parties to the commercial lease maintained friendly relations and the wife lived with her husband in the apartment located above the business premises, so that she was perfectly informed of this lease granted by the latter, especially since the lease was continuously renewed with the same tenant, without her ever opposing it until the summons.

Cass. 1re civ., 29 June 1983, LawLex202200002157JBJ.

Cass. 1re civ., 23 March 2011, LawLex202200002180JBJ; Also see Cass. 1re civ., 30 March 1999, LawLex202200002179JBJ.

Cass. 1re civ., 20 January 1998, LawLex202200002158JBJ.

Cass. 1re civ., 20 January 1998, LawLex202200002158JBJ, op. cit.

Cass. 3e civ., 8 January 1992, LawLex202200002183JBJ, regarding the sale of a building belonging to the community, subject to the wife's consent. – See also Cass. 3e civ., 14 November 2007, LawLex202100002622JBJ, according to which the exception of nullity of the notice invoked by the lessee is inadmissible since it follows from Article 1427, para. 1, of the Civil Code, that the action for nullity of an act performed by a spouse concerning a common asset is open only to the spouse of that spouse.

Cass. 1re civ., 6 February 1979, No 77-15.300 and No 77-15.369, regarding the sale of a jointly owned property made by one spouse without the consent of the other spouse, and whose nullity can be invoked by the latter, even against a bona fide purchaser.

Cass. 1re civ., 28 March 1984, LawLex202200002184JBJ.

Commercial Leases/Business Goodwill

65. Spouse

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65. Spouse

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