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“Promise and compromise: differences and consequences”, Me Caroline Dubuis Talayrach, lawyer

The promise and the compromise have distinct consequences, in particular on the right to fees of real estate agents. Detailed review by Maitre Caroline Dubuis Talayrach.

Let’s define what a promise and a compromise are to analyze the consequences of their non-fulfilment.

I – Compromise, promise: definitions

A. The synallagmatic promise to sell

It is also called sales agreement. It is an act by which the seller promises to sell to a buyer, who promises to buy: the two parties committing themselves to each other. Generally, this double commitment is concluded under various conditions precedent. It is therefore a sale subject to suspensive conditions (articles 1589 and 1584 of the Civil Code) and the fulfillment of these conditions makes the sale complete.

B. The unilateral promise

The unilateral promise is the contract by which one party, promising it, grants to the other, the beneficiary, the right to opt for the conclusion of a contract whose essential elements are determined and for the formation of which only the consent of the beneficiary (article 1124 of the Civil Code). Thus, only the promisor engages. The beneficiary, by signing the unilateral promise, accepts the option offered to him but does not commit himself to the promisor.

The use of the sole term of promise is not in itself sufficient to know the legal nature of the act. It is necessary to know if the promise is synallagmatic (compromise) or unilateral. The unilateral promise can be a promise to sell or a promise to purchase. In the first case, the one who undertakes is the seller, in the second it is the buyer.

C. The formalism of unilateral promises

Unilateral promises of sale or purchase are subject to specific formalities.

  • The unilateral promise to sell real estate must result from a private deed registered within 10 days from the date of its acceptance by the beneficiary or result from an authentic deed (article 1589-2 of the Civil Code). Otherwise, it is the nullity of the act that is incurred. This formalism applies only to unilateral promises to sell and not promises to purchase (Cass. 3rd civ. 18.03.1975 n° 73-14524).
  • The unilateral promise to purchase a property or a real estate right cannot be accompanied by a payment from the promisor, in any form whatsoever (article 1589-1 of the Civil Code). This text concerns the unilateral promise to purchase but more generally “any unilateral commitment”. This is the reason why, since June 1, 2001, purchase offers are no longer accompanied by payments of sums of money.

Finally, it is possible to provide, when signing a unilateral promise to purchase, for the payment of a sum of money by the purchaser after the exercise of the seller’s option and the expiry of the withdrawal if applicable. In a recent case, the Paris Court of Appeal (CA Paris, Pôle 4, Ch1, June 19, 2020 RG n°19/00214) considers valid the clause which stipulated the payment as a deposit of a sum of money within 8 days of acceptance of the promise by the seller or within 8 days of the expiry of the withdrawal period if the buyer benefited from it. The court concludes that the nullity of the promise is not incurred on the sole ground that it provided for the payment of a sum of 60,000 euros by MX

II – Failure to fulfill a unilateral promise

We often hear that a unilateral promise is more favorable than a compromise. What about between the parties and concerning the real estate agent?

A. Between the parties

What happens if a call or put option is not exercised? There was no meeting of wills due to the absence of the exercise of the option and therefore there was no sale. The expiration of the option exercise period releases the promisor from its commitment and the two parties are free.

In the event of a unilateral promise to sell, it is prudent to provide for the payment of compensation for immobilization of the property intended to compensate the seller-promising party in the event of the option not being exercised.

B. With respect to the real estate agent

The real estate agent’s right to remuneration is in particular conditional on the conclusion of an operation concluded and recorded in a single written document containing the commitment of the parties (Article 6 law 70-9 of January 2, 1970). This commitment must not contain a withdrawal clause (74 of decree 72-678 of July 20, 1972).

However, the unilateral promise does not establish the commitment of the parties but of only one (the promiser) and provides for a withdrawal clause. Thus and independently of the conditions precedent, the non-exercise of the option cannot give rise to compensation for the real estate agent (Cass. 1ère.civ., March 18, 1997, n° 9516135). In addition, the absence of a single deed containing the commitment of the parties also poses difficulties with regard to the right to remuneration in the event of non-signature of the authentic deed (Cass. 1ère civ, June 18, 1980, n° 79-10809 ).

III – Failure to reach a compromise

In terms of compromise, seller and buyer are engaged under various conditions precedent. What if there is no repetition?

A. Between the parties

If the conditions precedent are not lifted on the agreed date, the parties regain their freedom and the sequestration is returned.
The question is more delicate if the conditions precedent are lifted but the act is not repeated. In this case, the sale has become perfect even though the price has not been paid nor the final deed signed.

However, in the event of non-performance of a contract, the Civil Code (articles 1224 and 1225) provides for the possibility of inserting a termination clause in the compromise (which is very often the case in practice). The implementation of this clause will legally end the relationship between seller and buyer. There will remain the question of compensation for the party to whom the obligation has not been performed and the fate of the receiver. In the absence of agreement between the parties on this point, it will be up to the judge to decide.

B. With respect to the real estate agent

If a compromise has been signed but the sale is not completed, the real estate agent is not entitled to fees. He may nevertheless in certain cases claim damages if he proves the fault of the principal or his co-contractor (Cass.1ère Civ, 1st December 1987, n° 84.17276) and this even if he is not the debtor of the fees provided for in the mandate (Cass. ass. plenary, May 9, 2008, no. 07-12449, no. 568, Cass 1ère civ, December 18b, 2014, no. 13-23178).

The position of real estate professionals with regard to the right to fees is therefore more favorable in the context of a compromise.

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