The Seller's Obligation to Deliver the Business in France: Scope, Conformity, Remedies

The seller must deliver the business - and everything that was promised

Signing the deed sells the business; it does not hand it over. The seller's first obligation after the sale is delivery: putting the buyer in enjoyment and possession of the fonds de commerce - every element identified in the contract, in the state it was in at the sale, on time (C. civ. Art. 1604 and following). It is an obligation of result: the seller who fails must show an outside cause, and no clause can wipe its liability for breaching it. For the buyer, delivery is where the deal becomes real - and where the case law shows sellers failing in very concrete ways: clientele quietly diverted, equipment that turns out to be leased, installations that do not meet the stated norms, premises occupied past the agreed date.

This guide covers the seller's duty to deliver a French business: what exactly must be delivered and to what standard of conformity, how and when delivery happens, the buyer's remedies, termination, forced performance, price reduction, withheld payment, damages, the seller's few defences, and the accounting records the law makes the seller keep available for three years.

What the seller must deliver: the business as promised

The definition. Delivery transfers the thing sold into the buyer's enjoyment and possession (C. civ. Art. 1604). It does not transfer ownership - that passed, save contrary agreement, at the meeting of consents on the thing and the price. Delivery puts the fonds at the buyer's disposal so the buyer can take it over.

The scope. The seller delivers what was agreed: all the elements of the fonds as identified in the contract, with no substitutions without the buyer's agreement. The content therefore follows the fonds' composition - the clientele is always part of a fonds and must always be transmitted, while the other elements (trade name, sign, lease, industrial property, licences, equipment, goods) vary deal by deal, the parties being free to define what is sold.

Conformity to the contract. The fonds delivered must match the fonds promised - the contract's specifications, and also statements in documents outside the deed, such as advertising brochures, once they entered the contractual field. Conformity is measured against the seller's specific undertakings, and the case law is a catalogue of failures:

• the seller of a bakery had, at the same time and without telling the buyer, sold a second bakery that the first had been supplying, and abandoned delivery rounds to a competitor - a failure to deliver, because part of the clientele was never transmitted;
• a pharmacy was delivered with an employee presented as a qualified dispensing assistant who held no such diploma - an element the buyer could treat as essential given the announced turnover and the pharmacy's organisation;
• the seller declared free disposal of all the elements while a former employee had been authorised to use the sign - the breach stood even though the seller had already obtained a court order against that use (though the buyer's claim to a price refund failed, the breach having had no effect on the price);
• a bakery's deed stated that all installations met current health and safety norms while the gas oven's flue was non-compliant, forcing its replacement by an electric oven;
• a bar-tabac's deed announced electrical installations in good order and up to standard; the buyer quickly found electrical failures - and it did not matter that the licence IV, the introduction to the authorities and the lease had all been properly delivered.

The mirror case draws the line: no breach where the missing lease had no bearing on the fonds' value, the sale's purpose was to reunite the walls and the business in the same hands, and the fonds had a clientele of its own, proven by invoices, accounts and advertising.

Conformity to norms. Conformity can also be measured against technical standards. Professional norms (such as Afnor standards) count once they entered the contractual field - and some bind the seller even unmentioned in the deed: the Cour de cassation has applied a technical norm absent from the contract because it expressed the minimum rules of the trade and of safety binding all professionals.

Keeping the business intact until handover. The fonds must be delivered in the state it was in at the moment of the sale (C. civ. Art. 1614): the seller must conserve it until the agreed handover, whether or not ownership has already passed. Conservation is an obligation of means - the buyer must prove the seller's fault; failing that proof, the buyer bears loss or deterioration occurring between sale and delivery. Article 1614 is not public order: the parties can agree the fonds will be delivered in its state at the buyer's entry into enjoyment - which is why a precise description of the elements sold and their current state, drawn up at the private agreement, is the practical protection.

What did the seller fail to deliver?

Pick the problem you found - the check maps it to the rule and the remedy.

How and when the seller must deliver the business

Tangible elements. Goods and equipment are delivered under the ordinary law of sales (C. civ. Art. 1606): by handing the thing over, by handing over the keys of the buildings containing it, or by the parties' mere consent where transport is impossible at the sale or the buyer already holds the items on another basis. In practice a detailed inventory of goods and equipment is annexed to the deed - it is what lets a court verify performance, and it cuts both ways: judgment was quashed where a court held delivery complete although the annexed list included a refrigerated display case the seller had had to return to its leasing company.

Intangible elements. They are delivered by handing over the instruments that evidence them, or by the buyer's use of them (C. civ. Art. 1607): sign and trade name pass by use; the lease passes by handing over the documents recording it, most often the lease contract itself. For the clientele, the seller can introduce the buyer to the customers or transmit their names and addresses.

Where. Delivery happens where the thing sold was at the time of the sale, unless otherwise agreed (C. civ. Art. 1609).

When. The seller must deliver within the contract's deadline (C. civ. Art. 1610) - and it is for the seller to prove the deadline was kept. The deadline may be strict or indicative; absent contractual precision, the courts weigh its binding force. Parties who want it strict should say the deadline is de rigueur: its mere expiry then establishes the seller's default, with no formal notice. A strict deadline binds both ways - the buyer cannot demand early delivery. The agreed period runs, save contrary stipulation, from the contract's formation; where the sale is conditional, from the condition's fulfilment. With no deadline at all, the courts fix a reasonable time from the nature of the thing and the circumstances of the sale.

Why the date matters. The delivery date starts the clock on the buyer's warranty action over the accuracy of the deed's statements about the fonds, and it is the date from which the seller must make the accounting records available to the buyer. As a rule, delivery in practice takes place at the end of the period during which the seller's creditors can oppose the payment of the price - the price side of that timing is covered in this series' guide to paying the price.

The buyer's remedies when the seller fails to deliver

Proving the breach. The burden splits by the complaint. Pure non-delivery is the easy case: the buyer merely invokes the absence of handover, because the seller, bound to a result, must prove it delivered within the agreed time. Non-conforming delivery is the buyer's to establish, by any means. To fix the default formally, the buyer puts the seller on notice - a letter with a sufficient demand (C. civ. Art. 1344), a writ seeking termination, or a writ seeking performance. No notice is needed where the seller formally refused to deliver, or where the parties fixed a strict delivery deadline: its expiry alone reveals the default.

The choice: termination or forced performance. Once the breach is established, the buyer chooses between having the sale terminated and having it performed (C. civ. Art. 1610), acting within a reasonable time - though mere delay in choosing is not a waiver. Forced performance requires no proof of loss. Termination can come from the court, or, for a sufficiently grave breach, from the buyer's own notification to the seller (C. civ. Art. 1224). The parties can also build it in: a termination clause operating automatically on non-delivery, subject to a fruitless formal notice unless the clause dispenses with it (C. civ. Art. 1225). A termination clause never locks the buyer in - the right to demand forced performance survives it.

The third route: price reduction. Article 1610 names only termination and performance, but for commercial sales the case law lets the buyer claim a price reduction where the seller performed only partially, whether the failure touches the delivery conditions or conformity, and the reduction cumulates with damages. For the buyer of a fonds the route has a specific advantage: a price reduction is effective against the registered creditors, while a damages award would run into the priority of the creditors who filed oppositions. The case that shows it: a buyer who had to obtain the seller's expulsion by interim order, then found degradations and missing equipment that stalled the operation for months, obtained a reduction of the price.

The tax edge. Neither termination nor price reduction entitles the buyer to a refund, in whole or in part, of the registration duties paid at the sale (CGI Art. 1961). The seller cannot recover the tax paid on its capital gain either - but may book an equivalent loss.

Withholding the price. Save contrary agreement, the buyer's duty to pay flows from the seller's complete performance of the delivery duty. Until then the buyer may refuse to pay, invoking the defence of non-performance (C. civ. Art. 1219) - with no formal notice required.

Damages. Whatever else it elects, the buyer can claim damages for the loss the breach caused (C. civ. Art. 1611). The parties may fix them in advance by a penalty clause for non-performance or late delivery; the penalty for late delivery can cumulate with damages repairing a distinct loss, and stipulating a penalty clause is no waiver of the right to seek termination.

Your remedy when the business was not delivered

Pick what you want out of the situation - the check gives the legal route.

When the seller does not have to deliver - the few defences

Outside cause. Because the duty is one of result, the seller resists the buyer's claims only by proving that the failure or the delay is due to an outside cause - force majeure: an event beyond the seller's control, not reasonably foreseeable at the sale and whose effects appropriate measures could not avoid (C. civ. Art. 1218). The case law is strict about what does not qualify: the seller's health problems predating the sale, and the existence of a hidden defect.

The unpaid seller. The seller has its own defence of non-performance. Where the price is payable on completion and the buyer does not pay, the seller may refuse to hand over the fonds (C. civ. Art. 1612) - against a performance claim and against a termination claim alike. Where the price is payable over time, the seller cannot suspend delivery, save contrary agreement - with one statutory exception: even having granted time to pay, the seller need not deliver if the buyer has since fallen into insolvency, putting the seller in imminent danger of losing the price, unless the buyer posts security for payment at the term (C. civ. Art. 1613); the exception applies once the buyer's finances show the marks of a cessation of payments. And one warning specific to the fonds: payment made to the seller before the creditors' opposition period expires is not effective against those creditors.

No exoneration clauses. Delivery being an essential obligation of the sale, the contract cannot carry a clause relieving the seller of all liability for breaching it (C. civ. Art. 1170). The rule has teeth: the buyer of a bar-restaurant discovered the establishment had never obtained an opening authorisation for failure to meet safety norms - the deed's clause waiving the seller's responsibility on safety regulation was struck, because the seller could not exonerate itself from delivering a fonds with an opening authorisation. Likewise, where the deadline was treated as essential, a clause excluding liability for late delivery gives the seller nothing.

The books: what else the seller must deliver up for inspection

The buyer's control over the seller's accounts is organised by Article L 141-2 of the Commercial Code, whose provisions are mandatory - every contrary clause is deemed unwritten.

At the sale: the turnover statement. Since 11 December 2016, seller and buyer must countersign, on the day of the sale, a document setting out the monthly turnover figures between the close of the last financial year and the month before the sale. The older requirement, countersigning the books of the last three closed financial years and inventorying them, was abolished. The formality has no stated sanction: its omission does not void the sale, and the Cour de cassation holds it insufficient, alone, to establish a defect of the buyer's consent where the buyer knew the accounts.

After the sale: three years of access. The seller keeps ownership of its accounting books, but must keep every book covering the three financial years before that of the sale at the buyer's disposal for three years from the buyer's entry into enjoyment. The availability can take the form of consultation at a third party's, typically the seller's accountant, and the accountant may hand the documents to the buyer directly, the seller having no confidentiality to oppose to its own buyer on them.

Why it matters at delivery. The three-year window opens at the entry into enjoyment - one more reason the delivery date is worth fixing precisely in the deed. For the buyer, the books are the instrument for verifying after the fact what the turnover statement announced at closing; the checks to run before signing are covered in this series' due-diligence guide.

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 advice. Remedies depend on your deed and your facts. Always seek qualified legal advice before acting.