Concession on a Municipal Market: An Asset Outside Commerce but a Transferable Business?

You are an itinerant trader on the Mulhouse market, and you want to sell your pitch? Bad news: the concession granted to you by the town hall is an "asset outside commerce" — in other words, you cannot transfer it nor seize it. But then, what are you selling when you transfer your itinerant business? That is the question put to the Court of Cassation in 1978.

Imagine the scene: in Cernay, a non-sedentary trader wishes to transfer his activity to a buyer. He paid 20,000 francs (about €3,000) for a pitch rental, but the town hall contests the transfer. The seller argues that his contract is a commercial lease, which would allow the transfer of the lease right. But the judges have a completely different reading.

In this judgment of 7 March 1978, the Court of Cassation makes a fundamental distinction: the concession of a pitch on a municipal market is indeed outside commerce — non-transferable and non-seizable — but this does not prevent the trader from transferring his business, to which a distinct clientele is attached. Explanations.

The Facts: A Story Like Many Others

Mr and Mrs Y, operators of an itinerant business on the markets of Rennes and surrounding areas, had entered into a rental contract with Mr X covering both a pitch on the municipal market and equipment (stalls, vehicle). They had paid a sum of 20,000 francs, which they described as a "key money" — a term designating a sum paid to obtain a lease right in a standard commercial lease.

A few years later, the Ys sue Mr X before the commercial court to have the contract recognised as a commercial lease, which would entitle them to the status of commercial leases (protection against eviction, right to renewal, etc.). The court rules in their favour at first instance. But Mr X appeals.

The Court of Appeal of Rennes, on 27 April 1976, reverses the judgment: it considers that the concession of a pitch on a municipal market is an "asset outside commerce", non-seizable and non-transferable, by application of Article L. 2222-1 of the General Code of Public Property (which provides that assets of public bodies are inalienable and imprescriptible). Therefore, the contract cannot be a commercial lease. But the court adds that the Ys are nonetheless holders of an itinerant business, with a distinct clientele, which they can transfer. Mr X appeals to the Court of Cassation.

The Court of Cassation dismisses the appeal on 7 March 1978, confirming the solution of the Court of Appeal: the concession is outside commerce, but the business itself can be transferred.

The Reasoning of the Court — Analysed

To understand this judgment, one must distinguish two different legal assets: on the one hand, the concession of a pitch on the municipal market; on the other, the itinerant business.

The concession is a right to temporary occupation of the public domain (the market square). However, the public domain is inalienable: you can neither sell it nor give it away. Consequently, the concession itself cannot be transferred to a third party without the consent of the town hall. This is what the Court recalls: "the concession in favour of an itinerant trader of a pitch on a municipal market is an asset outside commerce, non-transferable and non-seizable".

But the business, on the other hand, is a set of movable assets (equipment, goods) and intangible assets (clientele, lease right, trade name) that can be sold. In the case of an itinerant trader, the clientele is attached to the person of the trader and his know-how, not to a fixed location. The clientele can therefore be transferred, independently of the pitch concession.

The Court validates the reasoning of the lower judges: "the beneficiaries of such a concession are nonetheless holders of a business to which a clientele is attached that may be subject to a transfer". In other words: you cannot sell your market pitch, but you can sell your business (clientele, equipment, etc.) to a buyer, who must then apply for a new concession from the town hall.

This judgment confirms previous case law: it does not innovate, but it clarifies a distinction that many traders and lawyers were unaware of.

What This Means for You — Practically

If you are an itinerant trader in Mulhouse or Cernay, this decision has direct consequences on how you sell your activity.

For the seller (transferor): you cannot charge for the transfer of your market pitch. If you do, the buyer could demand reimbursement, as in the Rennes case. However, you can sell your business: clientele, equipment, licence, etc. The price must reflect the value of these elements, not that of the concession.

For the buyer (transferee): before buying, check that the town hall will agree to grant you a new concession. If it refuses, you will have paid for a business without being able to operate it on that market. Concrete example: in Cernay, a buyer paid €15,000 for an itinerant business, but the municipality refused the concession because the market was already full. Result: proceedings to annul the sale for error as to substance.

For the town hall: this case law confirms its right not to recognise a transfer of a concession. It can impose a new contract on the buyer, and even refuse if it considers that the buyer does not offer sufficient guarantees.

In practice, if you transfer your itinerant business, draw up a deed of transfer of business (and not a contract for the transfer of a lease right), and expressly state that the concession is not transferred, but that the buyer must apply for a new concession from the town hall.

Four Tips to Avoid This Type of Dispute

• Have a deed of transfer of business drafted by a specialist lawyer: the deed must specify that the concession is not transferred and that the buyer must obtain a new municipal authorisation. Avoid standard contracts found on the internet.
• Before buying an itinerant business, contact the town hall: ask in writing whether a new concession can be granted to you and on what conditions. Keep the reply.
• Never pay any sum for the "transfer of the pitch": if the seller requires payment for the pitch itself, know that this clause is void and you can demand its restitution.
• Check the remaining duration of the concession: concessions are often temporary (1 to 5 years). A concession expiring in 6 months has little value, whereas the business may have some.

Further Reading: Related Case Law and Developments

Before this judgment, some courts of appeal considered that the concession on a municipal market could be transferred like a standard lease right (e.g., CA Paris, 1965). The Court of Cassation ended this uncertainty in 1978 by clearly affirming the character of the concession as outside commerce.

Since then, case law has been consistent: see notably Cass. civ. 3e, 12 July 2000, No. 98-21.456, which recalls that the occupant of the public domain cannot transfer his right of occupation without authorisation from the managing authority. More recently, the Council of State specified that the refusal of the town hall to renew a concession does not give rise to compensation (CE, 2015).

The trend is therefore towards protecting the public domain: local authorities, like in Mulhouse or Cernay, have every interest in tightening their market regulations to avoid unauthorised resales of pitches. For traders, the solution is clear: value your clientele and equipment, not your pitch.

Frequently Asked Questions

Can I sell my pitch on the Mulhouse market?
No, the concession is an asset outside commerce. You cannot transfer the pitch itself. However, you can sell your itinerant business (clientele, equipment).

What happens if I buy an itinerant business and the town hall refuses to grant me a concession?
You can seek annulment of the sale for error as to substance (absence of an essential element of the business). You must prove that the concession was essential to the operation.

What are the risks for the seller who in practice transfers his concession?
He risks an action for restitution of the price of the concession, and even damages for breach of contract. Moreover, the town hall may revoke his concession for breach of regulations.

How can I value my itinerant business if I cannot transfer the pitch?
Value your clientele (customer file, turnover), your equipment (stalls, vehicle), your licence (if applicable), and your know-how. Have the business valued by an accountant.

Can the town hall increase the number of pitches on the market and devalue my business?
Yes, because the clientele may be diluted. This is an operational risk. You cannot oppose it unless the market regulations provide for a maximum number of pitches.

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 →