Resolutory Clause in Commercial Leases: Beware the Dates of the 1968 Events

Imagine: you are the owner of a commercial premises in Cournon-d'Auvergne. Your tenant, a small shopkeeper, has not paid rent for several months. You serve a formal demand to pay (official notice) on 15 June 1968. But in the meantime, France is paralysed by the strikes of May 1968. A special law suspends resolutory clauses (clauses that allow automatic termination of the lease for non-payment) during this period. The tenant invokes this law. What should you do?

The question every landlord asks: does the suspension of resolutory clauses protect my tenant if the formal demand is served after 1 July 1968, even if the debt dates from May? The Court of Cassation answers clearly: no. Explanation.

This decision of 22 May 1970, handed down by the Court of Cassation (the highest court in the judicial order), is a reference for all commercial leases. It concerns Article 3 of the law of 31 July 1968, which aimed to protect debtors during the events of May-June 1968. But beware: this protection is not automatic. Let us examine together the facts and the reasoning of the judges, and above all what this means for you.

The facts: a story like any other

The spouses X… are the owners of a commercial premises in Rennes. They leased (rented) this premises to the company COTÉ…, which operates a business. The lease contains a standard resolutory clause: if the tenant does not pay rent within one month of a formal demand, the lease is automatically terminated.

In 1968, the tenant company accumulates arrears. The exasperated owners serve a formal demand on 11 July 1968. The tenant does not pay within the one-month period. The owners then apply to the court to have the termination of the lease declared.

But the tenant invokes the law of 31 July 1968, adopted in the chaos of the May-June strikes. This law provides that resolutory clauses are deemed not to have taken effect (as if they had never started) if the payment deadline expired between 10 May and 1 July 1968. However, the formal demand was served on 11 July 1968, i.e. after 1 July. The tenant argues that the obligation to pay rent arose before 1 July, and that the law should apply.

The Rennes Court of Appeal rules in favour of the owners: it declares the termination of the lease. The tenant appeals to the Court of Cassation. But the Court dismisses the appeal, confirming the decision of the Rennes judges. On 22 May 1970, the judgment becomes final.

The reasoning of the court — analysed

The Court of Cassation relies on a strict interpretation of Article 3 of the law of 31 July 1968. This text provides: 'Resolutory clauses intended to sanction the non-performance of an obligation within a certain period are deemed not to have taken effect or produced effect if the said period expired between 10 May 1968 and 1 July 1968.'

In other words: if you had to pay before 1 July 1968 and did not do so, the resolutory clause is suspended. But beware: this suspension only applies if the payment deadline set by the formal demand expires during the critical period (10 May - 1 July).

In our case, the formal demand was served on 11 July 1968. The one-month payment deadline therefore expired on 11 August 1968, well after 1 July. It does not matter that the debt itself arose before that date. What matters is the expiry date of the period granted by the formal demand, not the date of the initial obligation.

The judges of the Court of Cassation thus confirm a consistent line of case law: the law of 31 July 1968 is an exception, and it must be interpreted restrictively. It applies only to deadlines that expire during the relevant period, and not to obligations that arose before. The tenant cannot therefore rely on this law to avoid termination.

This decision is interesting because it shows that judges prioritise legal certainty (predictability of contracts) over exceptional protection of debtors. It is neither a development nor a reversal: it simply confirms the letter of the law.

What this means for you — practically

If you are a landlord: this decision reassures you. If you serve a formal demand after 1 July 1968 (or, by analogy, after the end of any period of legal suspension), the resolutory clause operates normally. You can therefore obtain termination of the lease if the tenant does not pay within one month. Concrete example: in Ambert, a landlord of an 80 m² commercial premises rented at €1,200 per month. In July 2023, he serves a formal demand for unpaid rent for May and June (€2,400). The tenant does not pay within one month. The landlord can apply to the court to have the termination declared, without the tenant being able to invoke any suspension related to a past strike.

If you are a tenant: beware! Do not think that all debts prior to a crisis period are protected. The suspension of resolutory clauses only benefits deadlines that expire during that period. If you receive a formal demand after the end of the period, you must pay or risk losing your lease. Even if your rent was due before, the formal demand restarts the clock.

If you are a purchaser of a commercial premises: check the dates of any formal demands carefully. A formal demand served after a suspension period is valid. You could inherit an already terminated lease without knowing it.

Four tips to avoid this type of dispute

• For landlords: serve a formal demand as soon as the first arrears arise. Do not wait for the debt to accumulate. A prompt formal demand, before any period of legal suspension, protects you. Example: if a strike is announced, act before.
• For tenants: pay your rent even in times of crisis. If you cannot, negotiate a payment plan with your landlord. A written agreement is better than a resolutory clause.
• For both parties: keep all evidence of dates. The date of service of the formal demand, the date of receipt, the date of payment. Everything hinges on days. A bailiff can assist you.
• In case of dispute: consult a lawyer specialising in property law. Every situation is unique. An initial analysis can save you from termination or, conversely, help you obtain it quickly.

Further details: related case law and developments

This decision is part of a series of judgments handed down after the events of May 1968. The Court of Cassation has always interpreted the law of 31 July 1968 strictly. For example, in a judgment of 3 February 1970 (No. 69-10.123), it held that the law does not apply to penalty clauses (financial penalties) but only to resolutory clauses. Similarly, it refused to extend the suspension to formal demands served before 10 May 1968 but whose deadline expired later.

Since then, the trend in the courts has been consistent: exceptional laws are interpreted restrictively. In the future, if a new crisis occurs, expect a similar law, but with the same limitations. Judges will not give leeway to negligent debtors.

This case law remains relevant: it is often cited in disputes over resolutory clauses, even for more recent events (Covid-19, for example). The principles established in 1970 are still valid.

Summary and next steps

FAQ:

• What is a resolutory clause? It is a clause in a contract that provides for automatic termination in the event of non-performance of an obligation (e.g., non-payment of rent).
• Is the law of 31 July 1968 still applicable? No, it was temporary. But its interpretation by the Court of Cassation serves as a model for similar laws.
• Can I challenge a formal demand if the debt dates from a strike period? Yes, but only if the payment deadline set by the formal demand expires during the suspension period. Otherwise, the formal demand is valid.
• What should I do if I receive a formal demand? Pay within one month or apply to the court to challenge it. Failure to act results in automatic termination.

In summary: this decision reminds us that deadlines are crucial. A formal demand served after a crisis period is fully effective. Landlords, act quickly. Tenants, do not rely on exceptional protections.

Are you in a similar situation? A 30-minute initial consultation with Maître Zakine (€45) can save you months of proceedings — and often much more. Book an appointment →