Commercial lease vs. precarious occupancy agreement

Me Ribeiro de Carvalho, as a commercial lease lawyer in Nice, will advise you on the difference between the commercial lease and the precarious occupancy agreement.

I The facts: a precarious occupancy agreement pending a transfer of business assets

Initially, the parties had entered into a standard commercial lease. Some time later, the parties entered into an early termination of the lease. In order to give the lessee time to remain on the premises pending the transfer of his business or his right to the lease, the lessor proposed a precarious occupancy agreement for a period of twenty-three months.
The agreement having expired, the owner then requested the eviction of its lessee, who remained in place despite the end of the agreement.

II The procedure

Before the fund’s judges, the buyer won his case, the magistrates considering that the simple mention of the exclusion to the provisions of articles L145 et seq. of the Commercial Code was sufficient to characterize a precarious agreement. Similarly, the transfer would be an uncertain event because it would involve a third party.

III The Court of Cassation’s decision: a proposed transfer of funds is not an element of precariousness allowing the exclusion of the right to a commercial lease

In a decision dated December 12, 2019, the French Supreme Court (Cour de cassation) censured the decision of the Court of Appeal under Articles L.145-5 of the French Commercial Code and 1134 of the French Civil Code.
Thus, a proposed sale of a business or its lease rights does not constitute a precarious situation justifying the use of such an agreement.
It considers that the proposed sale of the lessee’s business or its right to a lease does not justify the use of a precarious occupation agreement.
This is a logical decision that is in line with long-standing and consistent case law.
It is therefore important to remind all lessors and merchants that recourse to a precarious occupation agreement can only be made when there are objectively precarious reasons beyond the control of the parties.
Failing this, the agreement will be requalified as a commercial lease with all the very protective consequences of the Commercial Code.
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Reference: Court of Cassation 3rd civil chamber of 12/12/2019 n°18-23.784