Court of Cassation Ruling on Unilateral Promise of Sale

Extract

[...] The court considered that before the reform of February a retraction by the promisor before the exercise of the option prevented the formation of the sales contract. GTD, having become GTM, appeals to the cassation court. The company believes that the unilateral promise of sale definitively engages the promisor and therefore the retraction should not prevent the formation of the sale. Under the provisions of Articles and 1142 of the Civil Code, it invokes that legally formed conventions are endowed with an obligatory character. [...]

[...] Finally, MG and GTD concluded a reciprocal promise to transfer all remaining shares held by MG, subject to the conditions precedent of the completion of the two aforementioned transfers. On March MG notified GTD of the retraction of the unilateral promise (concerning the 13%). On June GTD notified MG of its intention to exercise the option. Thus, GTD exercised the option within 6 months of the general meeting. In the face of MG's retraction, GTD sued MG for forced execution of the unilateral promise. [...]

[...] Recall: scope of the decision Consorts Cruz, Civ 3ème December 1993 In this landmark ruling, the Court of Cassation had answered the following questions: Can a retraction following a promise of sale be subject to forced execution of the sale? Does the exercise of the option by the beneficiaries of the promise subsequent to the retractation of the promisor allow for the meeting of the wills between the parties? The Court had considered that not, the sale could not be subject to forced execution since the retraction was related to a promise that was only at the stage of a doing obligation, preventing the reciprocal wills from meeting. [...]

[...] In this situation the beneficiary has a potestative right of option, justified by the expression 'right to opt' in article 1124 of the Civil Code. Therefore, if the Consorts Cruz judgment allowed the promisor to revoke their consent on the condition of paying damages and interest to the beneficiary of the promise, the March judgment makes the retraction ineffective. Execution can be forced. This 2023 judgment is not, however, the first to set aside the Cruz jurisprudence. The third civil chamber had already operated this reversal in a 2021 judgment (3rd Civ., June appeal no. 20-17.554, Bull., (dismissed)). [...]

[...] The MG company claimed that this change in the rule infringed on legal security and the right to a fair trial guaranteed by the ECHR. The Court of Cassation rejects this argument. It explains that a constant jurisprudence does not create a vested right for litigants. Above all, it notes that this reversal was predictable because it was widely demanded by doctrine and ultimately consecrated by the reform. The immediate application is therefore justified to make the promisor suffer the consequences of his illicit retraction. [...]