This book provides a wide-ranging review of the European rules relating to distribution: exclusive purchase and exclusive supply, exclusive and selective distribution, motor vehicle distribution, franchises, commercial agents.

French Distribution Law

The lessor must guarantee that the lessee has a peaceful enjoyment of the business (Civil Code, Article 1719(3)) . He is therefore bound to make available to the lease-manager a business that meets the legal safety standards to enable him to regularly operate that business . He must also have obtained the authorizations which are mandatory for the exercise of the activity in question . Likewise, a …

Obligations of the lessor.

The Commercial Code does not contain any provision on the respective obligations of the parties to the lease-management contract. The obligations of the lessor and the manager are generally set by common agreement between them. Where the contract is silent, the provisions of the Civil Code relating to the general law on leases apply (Article 1714 et seq.), rather than those relating to commercial leases . However, not all the rules of the general law apply to lease-management. Thus, Article 1732 of the Civil Code pursuant to which the lessee is answerable for any deteriorations or losses occurring during his enjoyment of the leased property does not apply to the relationships between the lessor and the lease-manager of a business. The lessee's obligation to ensure that the premises are kept in a good state of repair is a best-effort undertaking, the non-compliance with which must be established by the lessor . Also, the provisions relating to the assumption that the premises are provided in good repair (Article 1722) , the absence of an inventory (Article 1731) , fire (Article 1733) , or assignment of the lease (Article 1717) do not apply, and the manager may not assign his lease to another person by reason of the intuitu personae character of the lease-management contract .

Cass. com., 23 December 1964; Cass. 3e civ., 10 May 1989.

Cass. com., 2 July 1996, LawLex200200005586JBJ.

CA Basse-Terre, 22 October 2001, LawLex200400002659JBJ.

Cass. com., 11 June 1979, LawLex201000000692JBJ: the presumption set forth in Article 1731 of the Civil Code which is limited to the rental repairs of buildings does not apply to the intangible components of a business under lease-management.

Cass. com., 21 April 1992, LawLex200200005912JBJ.

Application of the general rules of leasing.

The lessee is under an obligation to operate with due diligence ("en bon père de famille") according to the purposes intended by the lease (Civil Code, Article 1728(1)). In effect, as in any lease, the lease-management only gives a right of use in respect of its subject-matter. The lessor retains ownership of the business which is the subject-matter of the lease. The lessee may neither dispose of it nor cause it to disappear. He must see to the preserving of the business that he will have to restitute at the term of the contract and of the clientele which is an essential element of the business . He must refrain from doing anything that might result in the depreciation or reduction, cessation, even temporary, or final shutting-down of the business . He is also prohibited from diverting customers for his own ends . Insofar as the lessee must maintain the business in order to guarantee its preservation, the general rules of leasing according to which the lessee is answerable for the deterioration having occurred during the use do not apply . Lastly, the manager must comply with the rules applicable to the business operated. Non-compliance with the rules on hygiene and safety  or those relating to drinking establishments  may result in the business being closed down by the judicial or adminsitrative authorities and thus cause its disappearance.

The lessee must pay the amount of the rent set by the contract. Non-compliance with that obligation may be sanctioned by termination . The lease-manager must pay all fees owed even if the owner has not sent a formal demand and has not applied the termination clause . On the other hand, he may suspend the payments where the lessor fails to comply with his own obligations .

Pursuant to Article L. 144-11 of the Commercial Code, where the lease-management contract includes an escalator clause, a revision of the rent may be requested, unless otherwise provided for, whenever the rent calculated in accordance with this clause is increased or reduced by more than one quarter in comparison with the price previously determined contractually or by court order. Indexing is subject to Article L. 112-2 of the Monetary and Financial Code which requires that indexing of the price be directly related to the business of the lease-manager . The invalidity of an indexing clause is not extended to the lease-management contract where a substitute index is provided for in the event of the disappearance of or cessation of publication of the index .

The party wishing to review the rent must notify the other party by registered letter with acknowledgement of receipt or by extra-judicial means. Where no amicable agreement can be reached, the procedure for revision are subject to the provisions applicable to the revision of prices of commercial leases (Commercial Code, Article L. 144-12). The court must adjust the scope of the escalator clause to the fair rental value on the date of notification. The new rent applies with effect from the same date, unless the parties have agreed upon an earlier or more recent date before or during the proceedings. The two-year statute of limitations laid down in Article L. 145-60 of the Commercial Code for commercial leases applies to actions for the revision of the rent .

Cass. com., 15 May 1990, LawLex200200005784JBJ, for a lease-manager whose conditions of operation and state of maintenance of the premises during the occupation of the business have seriously depreciated the value thereof; 11 January 2000, LawLex200200005267JBJ: a lease-manager who allows his son - the holder of a competing business - to carry on the road shows of his business fails to comply with his contractual obligation to retain the clientele; 27 February 2001, LawLex200200005333JBJ, regarding a lessee who voluntarily fails to operate part of the business and associates himself with a third party at the risk of causing the loss of the clientele of the rented business.

Cass. com., 4 March 1997, LawLex200200005649JBJ, for a lease-manager who, nine months before, left the premises and finally closed the shop by informing the clientele of his transfer to another address; CA Versailles, 13 January 2000, LawLex200200005268JBJ, for a lease-manager who stops putting stocks in the shop and maintaining the walls and equipments and who transfers the specialized staff to other sites.

Cass. 3e civ., 4 February 1998, LawLex200200004645JBJ; CA Colmar, 22 June 1998, LawLex200200004608JBJ.

Cass. com., 16 June 1992, LawLex200200004614JBJ which confirms CA Pau, 21 December 1989, LawLex200200004599JBJ.

CA Toulouse, 4 May 1998, LawLex200200001133JBJ; Cass. com., 11 January 2000, LawLex200200005267JBJ; 21 November 2000, LawLex200200000709JBJ.

Cass. 3e civ., 13 October 1999, LawLex200200005241JBJ.

Cass. com., 22 October 1991, LawLex200200005861JBJ.

CA Paris, 8 March 2002, LawLex200300001548JBJ.

Cass. com., 15 May 1990, LawLex200200005784JBJ, in a case where the deprivation of sums on which the lessor could legitimately count had been the cause of a significant part of his cash difficulties; Cass. com., 27 October 2009, LawLex200900003257JBJ which upholds CA Aix-en-Provence, 14 February 2008, LawLex200900003303JBJ, which terminates the lease-management contract with shared wrongs on the side of the lessor who breaches his obligation to deliver by not having the administrative authorizations necessary to exercise the activity and of the lessee who does not pay his fees.

Cass. com., 25 January 2005, LawLex200500004061JBJ.

Cass. 3e civ., 11 January 2006, LawLex201000000126JBJ, regarding a lessor who does not fulfill his obligation to deliver by refusing to put the premises in compliance with the requirements of the administrative authority.

Cass. com., 16 February 1993, LawLex200200004646JBJ which quashes and cancels CA Metz, 6 December 1990, LawLex200200004189JBJ: the fee fixed in a lease-management contract cannot be indexed on the national construction cost index, which has no link with the object of an intangible movable property.

Obligations of the lease-manager.

The lessor must guarantee that the lessee has a peaceful enjoyment of the business (Civil Code, Article 1719(3)) . He is therefore bound to make available to the lease-manager a business that meets the legal safety standards to enable him to regularly operate that business . He must also have obtained the authorizations which are mandatory for the exercise of the activity in question . Likewise, all the works for restoring the business under lease-management cannot be borne by the lease-manager . If the leaseholder cannot take the place of the owner of the premises in carrying out the repair work, it is his responsibility to take all necessary steps to ensure that the tenant-manager can operate the business peacefully . Thus, the lease-manager may suspend payment of fees where the lessor does not comply with his obligation to deliver by refusing to put the premises in compliance with the requirements of the administrative authorities . The partial destruction of the premises following a fire does not exempt the lessor from his obligation to carry out the works of restoration of the premises where a recovery of the exploitation is possible .

Where the lessor undertakes to guarantee to the lease-manager exclusivity in the building, this exclusivity is only valid for the main authorized trade excluding any ancillary activities . In all events, the obligation to guarantee peaceful enjoyment requires the lessor to refrain from competing unfairly with the lease-manager .

CA Nîmes, 28 February 2002, LawLex200300000952JBJ: the effective disturbance of enjoyment and the commercial harm resulting from disorders affecting the walls of a business are attributable to the lessor of the business who fails to comply with his obligation defined in Article 1719 of the Civil Code to maintain the premises and the material in a normal operational state.

Cass. com., 13 July 2010, LawLex201000000868JBJ.

Cass. com., 27 October 2009, LawLex200900003257JBJ.

Cass. com., 5 December 2006, LawLex200600002521JBJ.

CA Bordeaux, 3 September 2015, LawLex201500001053JBJ.

Cass. 3e civ., 11 January 2006, LawLex201000000126JBJ. See also Cass. com., 13 July 2010, LawLex201000000868JBJ: the lessor of a business fails to comply with his obligation to deliver when he makes an establishment available for the lease-manager without informing him of an unfavorable opinion to its opening to the public issued by the local security commission.

Cass. com., 24 March 1998, LawLex200200004643JBJ, upholding CA Metz, 20 September 1995, LawLex200200004188JBJ.

CA Paris, 13 March 1986, LawLex200200005692JBJ.

Cass. com., 19 November 2002, LawLex200300000553JBJ which confirms CA Paris, 16 June 2000, LawLex200300000719JBJ: the lessor of a business does not breach his non-compete obligation where he resorts to a customer who is not on the list attached to the lease-management contract.

French Distribution Law

545. Obligations of the lessor.

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Les notions juridiques connexes

545. Obligations of the lessor.

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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