Doing business in France … The Commercial Lease “le bail commercial”

In last month’s blog, I mentioned the legal status of contracts and so today will speak of how this legal status can be sought to be enforced in relation to  commercial property and more specifically the commercial lease “le bail commercial”.

I shall just underscore here (without more) that the colloquial term of “commercial property” under English Common Law, is very different to what is termed as “propriété commerciale” in French Law. This term in French Law will be developed further here, but first let’s look at the legal status of contracts.

Legal status of the commercial lease “le bail commercial”

There are a plethora of statutory requirements to be fulfilled before a commercial lease “bail commercial” can be concluded and, indeed, there are applicable conditions to be met, pursuant to statute, where one decides he wants a commercial lease “bail commercial”.  In fact, some of the conditions relate to, in part, the type of property, the type of activity or business, etc.

Conclusion and execution of the commercial lease “bail commercial”

Consent is sine qua none in contract law and so, it is of no surprise that this is one of the first requirements surrounding letting commercial property.  Moreover, the party seeking the lease must have capacity to contract.  Certain entities and persons cannot sign a commercial lease “bail commercial”, for example, doctors are forbidden from having a commercial lease “bail commercial”.

Further, and generally, the leasehold “le bail commercial” will be for a nine-year period and comes with the much coveted, right to renew! This right is attached to the lessee whom the legislator has decided ought to bear the fruit of his labour in building business and indeed, a reputation, over the last nine years and so in exchange, he gets the automatic right to renew his lease “bail commercial” after the nine-year period.   Hence the commercial lessee obtains what is known in French as a “propriété commerciale” or the right to commercially exploit this property.

Limitations to the right to renew

Because of the consequences flowing from the lessor agreeing a commercial lease “bail commercial”, it is no surprise that this right is limited by imposing obligations and charges on the lessee. Thus, the lessee who does not respect his obligations under the commercial lease “bail commercial” may loose the right to exploite the commercial lease “bail commercial” and indeed, may loose the coveted and priviledged right to renew.

Litigation 

Clearly one understands the relevant garanties in the commercial lease “bail commercial” for the parties, on the one hand the lessee gets to build business, reputation, etc in one location and on the other hand, the lessor is garanteed payments and upkeep of the premises.

But automatically respecting these obligations and garanties only happens in a perfect world. And it is because we live in a not-so-perfect world, that the High Court (Tribunal de Grande Instance) has been given exclusive jurisidiction in all matters relating to “le bail commercial”. And litigation as a result of the lessor refusing to renew the “bail commercial” ranges from non-payment of rent, or untimely payment of rent, or unkept premises, or degradations, etc… The list is non-exhaustive thus cannot all be addressed here.

Notice and Enforcement

And it is because litigation is so frequent in cases relating to “le bail commercial” that the legislator has put in mandatory notice requirement before any litigation. Moreover notice must be certain and thus must take a specific form, otherwise the action before the court will be nullified!

Conclusion

Foreigners are now, not only entitled to “le bail commercial” but equally to the coveted right to renew here in France. I would therefore empress here that consulting an English speaking Avocat ought be at the fore before negotiating any type of agreement for commercial exploitation.

Remember “Les conventions légalement formées tiennent lieu de loi à ceux qui les ont faites… Elles doivent être exécutées en bonne foi.“…

Contact

Marcia B Moulon-Atherley, Attorney at Law and Avocat à la Cour

Law Office of Marcia B. Moulon

www.moulonlaw.com 

Copyright Marcia B. Moulon-Atherley, Esq. 2012-2015. All Rights Reserved.

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About moulonlaw

Attorney at Law, New York Bar, OECS & CARICOM Bars & Avocat à la Cour, Barreau des Hauts de Seine - France & Europe
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