03/20/2024
Written by Valérie Valeux and Caroline Moulin
Commercial lease – A notice of termination with an offer to renew under different terms and conditions from the expired lease is equivalent to a notice of termination with refusal to renew.
Cass. Civ. 3ème . 11-01-2024 n° 22-20.872, Publié au Bulletin
Careful drafting of commercial lease notices.
In a decision dated January 11, 2024, published in the Bulletin, the French Supreme Court (Cour de cassation) reiterates that “the renewal of a commercial lease is subject to the terms and conditions of the lease that has expired, with the exception of the judge’s power to set the price”.
Failing this, it must be treated as a notice to quit with refusal to renew, and gives rise to a right to eviction compensation.
Facts of the case:
Since January 15, 1999, the tenants had been operating a restaurant in premises leased under a commercial lease.
On April 29, 2016, the lessor issued a notice of termination with an offer to renew the lease, subject to a change in the size of the leased premises and new maintenance obligations.
The tenants refused. They returned the leased premises and asked the lessor to pay an eviction indemnity.
On June 21, 2022, the Bordeaux Court of Appeal rejected their claim.
Decision:
Pursuant to article 1103 of the French Civil Code, and in particular articles L. 145-8 and L. 145-9 of the French Commercial Code, the judges ruled that a notice of termination with an offer to renew the lease on different terms and conditions from the expired lease, except for the price, must be analyzed as a notice of termination with refusal to renew, giving entitlement to eviction compensation.
Note:
The French Supreme Court rigorously applies the specific provisions governing the renewal of commercial leases.
It takes care to point out that, by definition, the renewal of a contract is subject to the same terms and conditions as the one that has expired.
This principle applies equally to commercial leases.
Only a few exceptions are possible:
- Amicable agreement between the parties;
- The amount of rent (article L. 145-11 of the French Commercial Code);
- And the duration of the renewed lease (article L. 145-12 of the French Commercial Code).
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