The Pre-Sale Agreement for a French Business: How the Promesse de Vente Works

The promesse de vente on a French business: what it is and why deals use it

Few French business sales go straight to the deed. The buyer needs time, to audit the business, to obtain licences or approvals for the activity, to raise the financing, and the seller wants commitment before granting it. The instrument that bridges the gap is the promise of sale (promesse de vente): the owner binds itself, and may not sell to a third party while the promise runs, while the buyer completes its checks.

French law knows two versions, and the difference between them is not vocabulary. The unilateral promise binds one side and must be registered with the tax office within ten days of acceptance - on pain of nullity. The bilateral promise binds both sides and, as a rule, already is the sale. Choosing the wrong instrument, or drafting the right one badly, decides real money: the fate of the deposit, the tax date, and whether a seller who changes his mind can be forced to complete. This guide takes the two promises in turn, the deposit that comes with them, and what happens when either side backs out.

Unilateral or bilateral: the two kinds of promesse de vente

The unilateral promise. One party, the promisor, grants the other, the beneficiary, the right to opt for the sale, whose essential terms are already fixed; only the beneficiary's consent is missing (C. civ. Art. 1124, al. 1). A seller-side promise binds the owner to sell if the buyer opts; a buyer-side promise binds the buyer to purchase if the seller opts. The beneficiary's option is discretionary: free to exercise, free to walk.

The bilateral promise. Each party commits to the other (C. civ. Art. 1106) - typically a reciprocal promise to sell and to buy, which practice calls a compromis de vente. The reciprocal commitment need not be a mirror promise: a promise of sale given inside a settlement, against the beneficiary's abandonment of a court claim, has been held bilateral (Cass. ass. plén. 24 February 2006).

The label on the document does not settle the classification - the content does, in both directions:

• a "unilateral" promise is requalified as bilateral where the immobilisation indemnity is so high that the beneficiary is in reality compelled to buy - €76,224 against a price of €228,673 was enough (Cass. com. 20 November 1962), and the courts measure the indemnity against the price, not in the absolute;
• an act titled "bilateral promise of sale and purchase" is requalified as unilateral where the obligations are significantly unbalanced - the promisor bound to sell while the beneficiary remained free to refuse (Cass. 3e civ. 7 June 2018).

Why the classification matters: the unilateral promise must be registered on pain of nullity, the bilateral one escapes that formality; and the bilateral promise is, in principle, already the sale - with everything that follows for tax and for enforcement.

The unilateral promesse: acceptance, the 10-day registration, the option

Acceptance. The beneficiary's acceptance takes note of the promise while reserving the decision to buy - it is not the exercise of the option. No form is required unless the promise says so; acceptance can be express or tacit (paying the agreed indemnity, for instance), but never inferred from mere silence. It is not compulsory, but it is worth giving: once the promise is accepted, the promisor can no longer retract the offer, and the beneficiary holds the option irrevocably - without owing any obligation to buy. Acceptance also starts a clock: the ten days for registration run from it.

Registration. A unilateral promise of sale of a fonds de commerce is valid only if registered (C. civ. Art. 1589-2), at the tax office of either party's domicile, against a fixed duty of €125 (CGI Art. 680). Miss the ten days and the promise is void - a nullity that has caught professionals: the drafter who fails to tell the beneficiary about the registration requirement commits a fault (Cass. 1re civ. 1 October 1986). One carve-out from the case law: a unilateral promise inserted in a location-gérance contract has escaped the registration requirement where it had no necessary link of dependence with the promisor's other undertakings (Cass. com. 16 October 2019) - a narrow exception to know, not a strategy to rely on.

Exercising the option. The parties can prescribe a form, registered letter, bailiff's deed, delivery against receipt, and a prescribed form is enforced strictly: an option exercised outside it has no effect; a money receipt "on account of the exercise of the promise" did not replace the registered letter the promise required. Where the promise prescribes nothing, the general law applies: any unequivocal act manifests the choice, and the exercise can even be verbal - an oral notification through the promisor's notary, before the deadline, has been held valid. The exercise must be pure and simple: opting under conditions the promise does not contain is no exercise at all.

Effect. Exercising the option forms the sale and, unless the promise says otherwise, transfers ownership of the business and the risks to the beneficiary. From that moment, a party refusing to complete faces forced execution of the sale by judgment, or its resolution with damages. Two situations qualify the rule: where the promise carries an unfulfilled condition precedent, exercise turns it into a sale under condition; and where the parties disagree on the price-determination clause, exercise turns the unilateral promise into a bilateral promise that does not amount to a sale.

The deposit in a promesse de vente: the immobilisation indemnity

Most unilateral promises price the seller's wait: if the sale fails through the beneficiary, the promisor keeps an agreed sum - the immobilisation indemnity (indemnité d'immobilisation) - often paid at signature and credited against the price when the option is exercised. Four rules govern it:

• It pays for exclusivity, not for loss. The indemnity is the price of the exclusivity granted to the beneficiary. A judge cannot set it aside because the promisor suffered no proven loss in finding another buyer.
• It is kept only when the failure is the beneficiary's. If the sale fails for reasons not attributable to the beneficiary, the indemnity is not acquired to the promisor.
• It is not a penalty clause, it secures no obligation, so judicial revision under the penalty-clause rules is unavailable. It becomes one only where the parties tie it to the breach of an obligation: a loan not obtained through the buyer's fault, or a refusal to sign after every condition precedent was satisfied. It is also distinct from a withdrawal clause (dédit, C. civ. Art. 1590), which buys the right to walk away.
• The amount is free - within the requalification limit. A fixed sum or a percentage of the price; but an indemnity high enough to force the purchase turns the promise bilateral. Courts may reduce the sum where it was fixed by reference to the duration of the immobilisation and the beneficiary renounced early - unless the parties stipulated the indemnity acquired "as of right", which forecloses the enquiry. Say expressly in the promise whether the sum is revisable.

Not paying the indemnity has teeth: where it was due at signature or before the option deadline, the promisor can seek resolution of the promise with damages - and the beneficiary who has not paid cannot force the promisor to complete the sale, even if every condition precedent has been fulfilled.

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When the promesse de vente is already the sale

Article 1589 of the Civil Code states the rule that surprises every common-law buyer: the promise of sale is the sale, once the parties consent reciprocally on the business and the price. Sign a compromis on a fonds de commerce and, in principle, you have bought it - the registration duty falls due, and each side can enforce.

The rule bends to the parties' will, and the bend is where the drafting lives. The parties may agree that, their accord on asset and price notwithstanding, the sale will only be formed at the signature of the notarial deed. Courts enforce such clauses - but they interpret ambiguous ones, so the text must say clearly whether the notarial signature is a condition of the sale's formation or a mere deferred term. The difference is the whole deal: in one case no sale exists until the deed; in the other the sale exists now and the deed only records it.

A related trap catches parties who fix a deadline to reiterate the sale before the notary. Passing that deadline does not make the promise, or the sale already formed, lapse. It simply opens the phase where either party can give the other formal notice to sign, and then ask the court for forced execution of the sale, or its resolution - however long past the deadline. A seller who thinks the deal died with the calendar is usually wrong; a buyer who thinks so gives up rights it still holds.

Backing out of a promesse de vente: seller's side and buyer's side

The seller retracts before the option is exercised. The promisor is bound. A retraction during the option period does not prevent the contract: the beneficiary can exercise the option and, by that act alone, form the sale (C. civ. Art. 1124, al. 2 - a rule held compliant with the Constitution). The judge can then record the contract's existence and award damages against the recalcitrant promisor. Drafting can qualify the position, a promise may reserve the promisor a right of revocation, whose effect depends on its terms, which is one more reason the promise is written by lawyers, not adapted from templates.

The seller sells to a third party. The beneficiary can have that sale annulled on proving the third party knew of the promise (C. civ. Art. 1124, al. 3); the nullity is relative, protecting the beneficiary, who returns to the original position and may still exercise the option and complete. Against a third party in good faith there is no recourse - the claim is in damages against the promisor.

The promise has no deadline. Where no option period was fixed, the promisor can only exit after formally demanding that the beneficiary take a position within a reasonable time (C. civ. Art. 1211). Renunciation by the beneficiary is never presumed - it cannot be inferred from an oversight or an omission.

The buyer defaults. Not exercising the option costs the beneficiary nothing - except the immobilisation indemnity where one was agreed. After exercising, a beneficiary who refuses to perform faces the promisor's choice: resolution of the sale with damages, or forced execution.

The buyer substitutes someone else. Promises commonly let the beneficiary substitute any person, natural or legal - the clause that lets you sign personally and complete through your company. Without such a clause, passing the benefit of an accepted promise to a third party is an assignment of a claim, with its own formalities: notification through a bailiff or acceptance by the promisor in a notarial deed (C. civ. Art. 1690), plus an authentic deed or registration within ten days on pain of nullity (C. civ. Art. 1589-2). The substitution clause spares all of it - put it in.

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Frequently Asked Questions

This article is for general information only and states French law as published in the sources available at the date shown above. It does not constitute legal or tax advice. What a promesse binds you to depends on its exact wording. Always seek qualified legal advice before signing.