Clause prohibiting assignment of lease: the distinction between absolute and restrictive clauses

Imagine: you are the owner of a commercial premises in Tourcoing, rue de Lille. You lease it to a trader who, one day, decides to sell his business. But your lease contains a clause: "the tenant cannot assign his lease without the written consent of the landlord". Is this legal? How far can your right of veto go? This question is asked by thousands of landlords and tenants every year. The answer hinges on a nuance: it all depends on whether the clause is absolute or merely restrictive.

The Court of Cassation, in a judgment of 2 October 2002, decided the matter. It clearly distinguishes between clauses that prohibit any assignment – prohibited because they are contrary to freedom of trade – and those that subject assignment to conditions – perfectly valid. A decision that reassures vigilant landlords and provides a clear framework for assignors.

But concretely, how do you know if your clause is "absolute" or "restrictive"? And what remedies are available if it is abusive? This article deciphers the decision and gives you the keys to act, whether you are in Croix, Lille or elsewhere.

The facts: a story that happens every day

In 1990, Mr and Mrs X took a commercial lease of premises belonging to SCI du 27 décembre, located in Paris (but the case concerns traders all over France). The lease stipulates that any assignment of the lease or the business requires the express and prior authorisation of the landlord. In 1996, Mr and Mrs X wish to assign their business to a purchaser. They request the consent of the SCI, which refuses. Why? The landlord considers that the clause gives him a discretionary right to block any assignment.

Mr and Mrs X then apply to the court to have the clause declared abusive and void. At first instance, the court finds in their favour: it considers that the prior authorisation clause is equivalent to a prohibition on assigning, which is prohibited. The SCI appeals. The Paris Court of Appeal upholds the judgment, holding that the refusal to authorise the assignment is abusive and that the clause is void. The SCI appeals to the Court of Cassation.

Before the Court of Cassation, the stakes are crucial: if the prior authorisation clause is systematically considered a prohibition, all leases containing such a clause would be weakened. The High Court quashes the appeal judgment. It recalls that the prohibition of clauses prohibiting assignment of the lease only applies to clauses that prohibit any assignment, absolutely and generally. A clause that subjects assignment to prior authorisation is not, in itself, a prohibition; it is a mere limitation.

The reasoning of the court — dissected

The Court of Cassation relies on Article 1134 of the Civil Code (now 1103) which enshrines freedom of contract, and on the principle of free assignment of the business, guaranteed by Article L. 145-16 of the Commercial Code. The latter provides: "Any clause which prohibits the tenant from assigning his lease to the purchaser of his business shall be deemed unwritten." But the Court clarifies: this nullity only affects clauses that impose a pure and simple prohibition, without any restriction. A clause that merely requires the landlord's consent, or imposes conditions (solvency of the assignee, use of the premises), remains valid.

The lower courts had made a mistake: they had equated the refusal of authorisation with a prohibition. However, the Court recalls that the refusal may be justified by a legitimate reason (for example, the assignee does not offer sufficient guarantees). It is not the clause that is abusive, but its application may be. The distinction is fundamental.

This decision is a confirmation of previous case law: the Court of Cassation has maintained a consistent position since the 1990s. It does not create a reversal, but it refines the dividing line. The judgment is published in the Bulletin, which gives it particular authority. The arguments of Mr and Mrs X – who invoked the freedom of assignment – were not accepted, because the clause did not eliminate it, it regulated it.

In short, the landlord retains the right to control who enters his premises, provided that this control is not an absolute obstacle. A nuance that changes everything.

What this means for you — practically

If you are a landlord: you can rest easy. You have the right to include in your lease a clause requiring your prior authorisation for any assignment. But be careful: do not refuse systematically. If your refusal is deemed abusive (for example, without valid reason), the tenant can sue you and obtain damages. In Croix, a landlord had to pay €15,000 for blocking an assignment when the assignee had all the guarantees.

If you are a tenant: you are not trapped. If your lease contains a clause totally prohibiting assignment, it is void. You can challenge it. On the other hand, if the clause is merely restrictive (prior authorisation, solvency condition), you must comply. If the landlord refuses without legitimate reason, you can apply to the court to have the refusal declared abusive.

If you are a purchaser of a business: before signing, check the lease. Ask to see the assignment clause. If it is restrictive, make sure the landlord is willing to approve you. Otherwise, you risk ending up in a dead end.

A concrete example: a tenant in Tourcoing wanted to assign his business for €80,000. The landlord refused, relying on an authorisation clause. The tenant applied to the court, which held the refusal abusive and ordered the landlord to pay €10,000 in damages. The assignment eventually took place, but with a six-month delay.

Four tips to avoid this type of dispute

• Draft a clear and balanced assignment clause: do not settle for a simple "prior authorisation". Specify the legitimate grounds for refusal (insolvency, change of incompatible activity, etc.) and a maximum response time (e.g. 30 days).
• Keep evidence of your reasoned refusal: if you refuse an assignment, send a registered letter explaining why (e.g., the assignee has a poor credit score). In the event of a trial, you will demonstrate that your refusal is legitimate.
• If you are a tenant, have your lease checked by a lawyer before signing: a total prohibition clause is void, but a restrictive clause may bind you. Better to anticipate than to fight later.
• In case of conflict, try mediation before trial: the courts are congested. Mediation can lead to an agreement in a few weeks, for a few hundred euros, compared to months of proceedings and much higher legal fees.

Further exploration: related case law and developments

The position of the Court of Cassation is consistent. A judgment of 3 May 2018 (No. 16-26.780) recalls that the approval clause (prior authorisation) is valid, but the refusal must be justified by a serious and legitimate reason. Another judgment of 12 July 2005 (No. 04-10.761) specifies that a clause subjecting assignment to the landlord's consent is not prohibited, because it does not constitute an absolute prohibition.

The trend of the courts is therefore to validate restrictive clauses, while sanctioning abuses. This means that landlords have an interest in being reasonable, on pain of damages. Tenants, for their part, must prove that the refusal is abusive – which is not always easy.

For the future, the question may arise as to whether a clause that requires authorisation without a response time is equivalent to a prohibition. Some lower courts are beginning to consider that a prolonged silence of the landlord (more than 2 months) may be equated to an abusive refusal. Case law is therefore evolving on practical modalities.

In practice: what to do

FAQ:

1. My clause says "the tenant may not assign his lease without the written consent of the landlord". Is it valid?
Yes, it is a valid restrictive clause. The landlord may refuse, but only for a legitimate reason.

2. The landlord refuses without reason. What can I do?
You can apply to the judicial court to have the refusal declared abusive and claim damages. A lawyer will help you build a solid case.

3. Is there a time limit to challenge a refusal?
Yes, the action is time-barred after 5 years from the refusal. But act quickly to avoid losing the purchaser.

4. Can I assign my lease without authorisation if the clause is void?
Yes, if the clause is an absolute prohibition, it is deemed unwritten. You can assign freely, but be careful: the landlord may still challenge the assignment if it causes him harm.

5. What should I do if I am a purchaser and the landlord refuses approval?
You can negotiate with the seller for them to obtain consent, or withdraw from the purchase. Always check before signing the preliminary contract.

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