Promise of Lease and Promise of Renewal in French Commercial Leases

Three Instruments, One Transaction

French commercial lease negotiations produce three distinct pre-contractual instruments that are frequently confused but operate very differently. The promesse unilatérale de bail (unilateral promise of lease) binds only the promisor and gives the other party a free option. The promesse synallagmatique de bail (bilateral promise of lease) binds both parties and, where it contains all essential terms, usually is the lease itself. The promesse de renouvellement (promise of renewal) is a clause within an existing lease by which the landlord commits to a second term, waiving the statutory right to refuse renewal.

Understanding which instrument is in play — and whether a given document has been correctly characterised — determines the entire legal position of the parties, including who is bound, by what, and from when.

The Unilateral Promise of Lease (Promesse Unilatérale)

Definition and Distinction from a Mere Offer

A unilateral promise of commercial lease is a contract under which one party (the promisor, promettant) commits to granting or taking a lease, while the other party (the beneficiary, bénéficiaire) is granted an option — the freedom to decide whether to conclude the lease or not (C. civ. Art. 1124 al. 1). For the promise to be classified as unilateral, only the promisor must have undertaken an obligation; the beneficiary remains uncommitted until they exercise the option.

This distinguishes the unilateral promise from a mere offer: accepting an offer forms the contract immediately; accepting a promise merely fixes the pre-contract, leaving the beneficiary holding the right to opt. Only the exercise of the option — the levée d'option — creates the lease.

Three Essential Elements for Validity

For a unilateral promise of commercial lease to be valid and to bind the promisor, it must contain the three essential elements of the lease itself: the premises let, the rent, and the duration of the lease. The rent must be determined or determinable. The duration must be specified — courts have held that agreement on premises and rent alone, without agreement on duration, is insufficient to constitute a valid promise of commercial lease (Cass. 3e civ. 5-12-2001). These validity requirements are assessed at the date of the promise. The promisor must have legal capacity and the power to dispose of the property at the date of the promise; the beneficiary's capacity is assessed at the later date when they exercise the option.

Accepting the Promise and Exercising the Option

The promise becomes a contract only once accepted by the beneficiary. Until acceptance, it is merely an offer that can be revoked. Acceptance of the promise must not be confused with exercise of the option: acceptance fixes the pre-contract and secures the beneficiary's right to opt; it does not create the lease. The lease is formed only by the levée d'option.

Acceptance requires no particular form unless the promise specifies otherwise. A levée d'option that does not comply with the prescribed procedure is without effect (Cass. 3e civ. 7-1-1987) — unless the promisor has waived the formality. Where no deadline is stipulated for exercising the option, the beneficiary may in principle do so within five years — the ordinary prescription period under Article 2224 of the Civil Code — unless the terms of the promise imply an obligation to act within a reasonable time.

The 2016 Reform: Revocation No Longer Defeats the Promise

Before the 2016 reform of contract law (Ord. 2016-131 of 10 February 2016), French case law allowed the promisor to revoke a unilateral promise before the beneficiary exercised the option. The sanction for revocation was limited to damages; courts could not order the promisor to perform the lease. Article 1124 al. 2 of the Civil Code, as rewritten with effect from 1 October 2016, changed this fundamentally: revocation of a unilateral promise during the option period no longer prevents the formation of the promised contract. The beneficiary may exercise the option despite the revocation and seek judicial enforcement of the lease.

For promises concluded before 1 October 2016, the Cour de cassation achieved the same result by doctrinal development. In Cass. 3e civ. 23-6-2021 (n° 20-17.554), the court held that even under the pre-reform law, the promisor's revocation does not prevent the formation of the promised contract — the promisor commits definitively at the date of the promise. This unified the regime for all promises regardless of date.

The Indemnité d'Immobilisation

Where the beneficiary does not exercise the option, they owe no contractual obligation — the whole point of the unilateral promise is that the beneficiary is free. However, the promise commonly provides that if the beneficiary fails to exercise the option, a specified sum called the indemnité d'immobilisation falls due to the promisor. This sum compensates the promisor for having kept the premises off the market for the option period.

The indemnité d'immobilisation is retained by the promisor only where the non-realisation of the promise is attributable to the beneficiary (Cass. 3e civ. 15-12-2010 n° 09-15.211). It does not qualify as a clause pénale and is therefore not subject to judicial reduction — confirmed by the Cour de cassation (Cass. 3e civ. 5-12-1984). The rationale is that the indemnity constitutes the price of the exclusivity granted to the beneficiary, not a penalty for breach; the beneficiary has no obligation to take the lease and commits no breach by declining the option. The indemnité d'immobilisation is also distinct from a clause de dédit, which allows a party to exit an obligation they have assumed, whereas the indemnité compensates for non-exercise of a right that was never an obligation.

Substitution Clause: Transferring the Benefit of the Promise

A unilateral promise of lease frequently contains a clause allowing the beneficiary to substitute a third party in their place. This operates as a cession of contract: the beneficiary assigns their position as beneficiary to the third party, with the promisor's advance consent having been given in the promise itself. For the substitution to be effective, it must be notified to or acknowledged by the promisor and evidenced in writing on pain of nullity (C. civ. Art. 1216).

The Bilateral Promise of Lease (Promesse Synallagmatique)

When the Promise Is the Lease

A bilateral promise of commercial lease is one where both parties have undertaken reciprocal obligations — the landlord promises to let and the tenant promises to take the lease at agreed terms. The central question is whether the bilateral promise constitutes the lease itself or merely a pre-contractual instrument distinct from the final lease. The answer is straightforward where the parties have agreed on all the essential terms (premises, rent, duration): the promise is the lease (Cass. 3e civ. 28-5-1997). The parties cannot escape this result simply by labelling their document a "promise" or providing for a later notarial deed, unless they have made that deed a constitutive element of their consent — that is, unless they have made clear they do not intend to be bound until the deed is signed.

A condition suspensive in a bilateral promise does not prevent its formation as a lease; it merely suspends the execution of the lease until the condition is fulfilled. Similarly, a bilateral promise with a suspensive term (a fixed future date for the lease to take effect) constitutes the lease from the date of the promise, with effects deferred.

When the Promise Does Not Val as a Lease

The parties can validly exclude immediate formation of the lease by making the notarial deed a condition of their consent — typically by expressly providing that the promise will be void if not executed by deed within a certain period (Cass. 3e civ. 28-5-1997; Cass. 3e civ. 9-7-2014). Where the notarial deed is thus a constitutive element and the deadline passes without the deed being signed, the promise lapses. Where the parties have left essential terms to be determined later (charges and conditions to be fixed, price to be determined by expert), the document is not yet a promise valant bail.

The Promise of Renewal (Promesse de Renouvellement)

What the Commitment Entails

A renewal promise is a clause in the initial lease — or in a subsequent avenant — by which the landlord commits to renewing the lease at its expiry. It is most commonly inserted to allow the tenant to amortise the cost of fit-out works over a period longer than nine years, or at the insistence of a lender financing those works. The renewal promise is valid as long as it does not make the lease perpetual, which would be void under Article 1210 of the Civil Code. A clause providing that the lease "will be renewed for the same destination and for a period of nine years" at its initial expiry is valid: the renewal is automatic and fixed-term, not indefinite (CA Toulouse 12-4-2011).

What Rights the Landlord Waives

By committing to renewal, the landlord waives the right conferred by Article L 145-14 of the Commercial Code to refuse renewal on payment of an eviction indemnity (Cass. 3e civ. 29-10-1970). The case law further indicates that where the promise provides for automatic renewal, the landlord also loses the ability to oppose renewal for motif grave et légitime under Article L 145-17: if renewal is automatic, there is no opportunity to insert a refusal, whether or not a serious and legitimate ground exists. The landlord's only recourse is to seek resiliation of the lease on the basis of a resolutory clause or judicial termination for breach (CA Paris 27-9-2006; confirmed Cass. 3e civ. 1-10-2008).

Rent on the Renewed Lease

The parties may fix the rent for the renewed lease within the promise itself. If the promise is silent on rent, the landlord does not waive the right to have the renewed lease rent judicially determined. Silence on rent is not consent to carry forward the current rent: where the landlord wishes to propose a new rent, they must serve a formal congé with an offer of renewal containing a proposed rent, as provided by Article L 145-9 al. 5 (Cass. 3e civ. 23-5-2012; Cass. 3e civ. 12-12-2012).

No Congé Required Where Renewal Is Automatic

Where the promise provides for automatic renewal, the landlord is released from the obligation to serve a congé avec offre de renouvellement under Article L 145-9 al. 1 and 2 of the Commercial Code. The renewal occurs by operation of the clause, without any notice. This was confirmed in the leading judgment of Cass. 3e civ. 27-10-2004 (n° 03-15.769), where the court held that the parties' advance agreement on the automatic character and rent conditions of the renewal dispensed with the formal notice requirement entirely.

Opposability to Third-Party Buyers

A renewal promise is opposable to a buyer of the property under the same conditions as the lease itself. Where the promise was recorded in an authentic deed and its existence was mentioned in the deed of sale, it is enforceable against the buyer (Cass. 3e civ. 23-5-1995). The buyer who acquires a property subject to a valid renewal promise takes the property with the landlord's renewal obligation attached.

This article is for general information and educational purposes only. It does not constitute legal advice and does not create a lawyer-client relationship. Laws may have changed since publication. Always seek qualified French legal advice before concluding or relying on a promise of lease or renewal.