Forced Execution of Sale Promises: Limits and Controversies

Extract

[...] This evolution has strengthened the predictability of transactions, but has also introduced a certain rigidity, some sellers being discouraged from making overly binding unilateral promises. Thus, although the forced execution of sale promises is now a firmly established principle in French law, it remains subject to constitutional limits and contractual strategies aimed at reducing its impact. The question of the balance between the protection of the beneficiary and the freedom of the promisor remains a central issue in the application of this mechanism. [...]

[...] Can we force someone to sell against their will by making the effectiveness of the sales promise take precedence over the freedom to retract? Enforcement of Sales Promises « Pacta sunt servanda : This Latin adage, which means 'agreements must be respected,' is the foundation of the binding force of the contract in civil law. It translates the idea that a validly formed contract definitively engages its parties. But what happens when one of the contracting parties refuses to execute their commitment? [...]

[...] The legislative consecration of the principle of forced execution For a long time, jurisprudence refused to order the forced execution of sales promises in case of retraction of the promisor. The decision of the Consorts Cruz, rendered by the third civil chamber of the Court of Cassation on December had marked a break by considering that as long as the beneficiary had not exercised the option, the promisor could still back out of their commitment. This position, based on the idea that the promise created only an 'obligation to do' and not a 'duty to give' prevented the automatic formation of the promised contract and left the beneficiary with only a right to damages and interest in case of faulty retraction by the promisor. [...]

[...] We will thus see, in the first place, how legislative and jurisprudential evolution has strengthened the forced execution of sales promises before examining the limits and controversies that this solution raises (II). I. The affirmation of the principle of forced execution of sales promises As part of the affirmation of the principle of forced execution of sales promises, we will first examine the legislative consecration of this principle, by looking back at the developments that led to its inclusion in the Civil Code, particularly through the 2016 reform Then, we will analyze the scope of this forced execution and its impact on securing transactions, particularly in the real estate sector A. [...]

[...] Before the reform, the beneficiary could see their right challenged by the simple retraction of the promisor, obliging them to be satisfied with an often insufficient indemnification in light of the damage suffered. From now on, in the event of a regular option being lifted, the sales contract is formed immediately and can be imposed on the promisor, thus ensuring the effectiveness of the beneficiary's right. This evolution is particularly important in the field of real estate, where sale promises are frequently used to prepare complex transactions. [...]