Background
Three individuals owned a commercial property that they had rented to Gerstaecker France under a lease dating to September 2004. Gerstaecker France was authorized to sublet the property to its subsidiary, Gerstaecker Paris, which operated the business on site. In January 2021, the landlords decided to sell the property and instructed a notary to notify the tenant of the sale offer, as required by French commercial law.
On January 15, 2021, the notary issued a formal sale offer designating Gerstaecker France as the recipient, though the notice was also communicated to the subtenant, Gerstaecker Paris. The offer stated the sale price and conditions. On January 27, 2021, Gerstaecker Paris (the subtenant) responded in writing accepting the offer and stating it would seek a loan to finance the purchase. Just one day later, on January 28, 2021, the landlords notified the notary that they had issued no such sale instruction and that the offer was “inoperative”—effectively retracting it. Nevertheless, on February 1, 2021, Gerstaecker France (the main tenant) formally accepted the offer. The tenant subsequently sued seeking a judgment confirming the sale and compelling the landlords to execute the deed.
The Court of Appeal of Paris ordered the landlords to sign the authentic deed of sale, reasoning that the landlords could not retract their offer during the statutory one-month protection period mandated by the French Commercial Code. The landlords appealed to the Court of Cassation.
The Court’s Holding
The Court of Cassation reversed, clarifying the distinction between the landlord’s binding obligation under French commercial law and the permissible exercise of offer retraction. Under Article L. 145-46-1 of the Commercial Code, when a commercial landlord notifies a sale offer to the tenant, that notification constitutes a binding offer of sale, and the tenant has one month from receipt to accept or reject it. The statutory period prevents the landlord from selling the property to a third party during that interval. However, the Court held that this protection does not render the offer irrevocable against the landlord’s right to retract.
The Court drew on Articles 1113 and 1116 of the Civil Code, which establish that a contract is formed by the meeting of an offer and acceptance, and that retraction of an unaccepted offer prevents contract formation. Article 1116 further provides that retraction of an offer in violation of a prohibition against retraction prevents the conclusion of the contract but engages the offeror’s extra-contractual (delictual) liability—meaning the tenant may sue for damages, not for forced execution of the sale. The Court concluded that while the landlord remains bound by the offer for the duration of the statutory period (preventing sale to third parties), the landlord retains the right to retract an unaccepted offer. Such retraction before acceptance prevents the contract from forming entirely, though it may expose the landlord to a damages claim under the law of non-contractual liability.
The Court found that the Court of Appeal violated the applicable articles by holding that the landlords could not retract their offer within the statutory period and by ordering forced execution of the sale. Because the landlords’ January 28, 2021 retraction occurred before acceptance, no contract was formed. The Court annulled the judgment and remanded the case to a differently composed panel of the Court of Appeal.
Key Takeaways
- Landlords of commercial properties may retract unaccepted sale offers even during the statutory one-month notification period required by Article L. 145-46-1 of the French Commercial Code.
- The statutory one-month period prevents the landlord from selling to third parties but does not eliminate the landlord’s right to withdraw an unaccepted offer.
- Retraction of an unaccepted offer prevents contract formation entirely; the remedy for wrongful retraction is damages liability, not forced execution of the sale.
- The tenant’s remedy for a landlord’s retraction must be pursued as a non-contractual damages claim, not as specific performance of the sale.
Why It Matters
This decision significantly clarifies the balance of rights between commercial landlords and tenants in French law. While the statutory notification and one-month acceptance period provide meaningful protection to tenants seeking to purchase leased premises, the decision confirms that such protection does not extend to forcing execution of an offer that the landlord withdraws before acceptance. This ruling prevents an absolute “irrevocable offer” interpretation that would have severely restricted landlord flexibility. However, landlords remain constrained: they cannot sell to third parties during the period, and retraction exposes them to damages liability, creating practical deterrents to casual withdrawal.
For tenants and landlords alike, the decision underscores the importance of prompt acceptance of sale offers and careful attention to procedural requirements. Tenants cannot rely on the statutory period to force a reluctant landlord to sell; instead, their recourse is limited to compensation for the landlord’s breach. For real estate practitioners in France, the decision reaffirms that the statutory regime protects the tenant’s opportunity to purchase but stops short of making the offer an absolute commitment enforceable by specific performance.