Sale without authority: when silence amounts to approval (No. 72-10.836)

Imagine the scene: in Saint-Jean-de-Luz, you sign a preliminary contract for a flat in a new development. The builder collects the price from you. Then, the SCI owner – who never signed – argues that the seller had no right. Do you lose your deposit? This situation, experienced by the Z... couple in 1973, received a clear answer from the Cour de cassation. But what exactly does it change for you today?

This decision, little known to the general public, settles a crucial question: can a company be bound by a contract signed without apparent authority? The judges' answer is unequivocal: yes, if its directors knew of the sales and tacitly approved them. A principle that protects bona fide purchasers, but also imposes increased vigilance on SCI managers.

In this article, we dissect the judgment of 5 June 1973 (No. 72-10.836), its practical consequences and the lessons to be learned for your property projects, whether in Anglet, Pau or elsewhere.

The facts: a story like many that happen every day

In 1968, a couple, the Z... spouses, wished to purchase a new flat in Saint-Jean-de-Luz. They approached a builder, Mr Chalvet, who sold them a property "off plan" (sale of a flat to be built). The builder showed them a document entitled "George V exclusive mandate to sell", supposedly authorising him to sell on behalf of the SCI owner of the land. The spouses signed, paid the price – a significant sum for the time – and awaited delivery.

Problem: the SCI, represented by its manager, Mr X., refused to recognise the sale. His argument: the builder did not have the authority to sell, nor a fortiori to collect the price. The Z... spouses found themselves without a home and without money. They sued the SCI to obtain delivery or damages.

Before the cour d'appel de Pau, the judges ruled in favour of the spouses. They found that the SCI manager was fully aware of the sales concluded by Chalvet, and had even approved them by allowing them to proceed. The SCI was therefore bound by these sales, through the mechanism of tacit ratification (approval without writing). The SCI appealed to the Cour de cassation.

The Cour de cassation, in its judgment of 5 June 1973, dismissed the appeal. It upheld the reasoning of the lower court: "The lower court judges, who note that the manager of a real estate civil company was fully aware of the sales of flats to be built concluded by a builder on behalf of that company and had approved them, may deduce the existence of a ratification by the company." In short, the manager's silence and inaction amount to acceptance.

The reasoning of the court — analysed

At the heart of this case is a simple legal principle: authority (power given to someone to act on your behalf). In law, an agent (the builder) can only bind his principal (the SCI) if he has received authority, express or implied. But what happens if the agent exceeds his powers? The answer depends on the principal's reaction.

The Cour de cassation relies on Article 1998 of the Civil Code (in its version then in force): the principal is bound to perform the obligations contracted by the agent in accordance with the authority. But above all, it applies a consistent rule of case law: ratification (subsequent approval) may be tacit, i.e. result from unequivocal conduct. Here, the manager knew that the builder was selling flats; he did nothing to oppose it. Moreover, he allowed the price to be collected. This conduct amounts to ratification.

The judges dismissed the SCI's argument that the exclusive mandate was forged or insufficient. Irrelevant, they said: the manager, through his knowledge and approval, covered the lack of authority. In other words, you cannot turn a blind eye to sales for months and then claim they are void.

This decision is a confirmation of previous case law. It enshrines the principle of apparent authority: a third party acting in good faith may rely on the apparent actions of the principal. But note: tacit ratification presupposes that the principal had actual knowledge of the acts. Simple silence is not enough if it is not accompanied by elements showing knowledge.

What this means for you — practically

This decision has very practical implications, whether you are a purchaser, seller or SCI manager. If you are a purchaser, it protects you: you can demand delivery of the property if the real owner (the SCI) was aware of the sale. Example with figures: in Anglet, a couple buys a flat for €250,000. The builder collects €50,000 as a deposit. If the managing SCI knew that sales were being concluded and did not react, it must deliver the property or reimburse in full.

If you are a SCI manager, be vigilant: your silence can bind you. As soon as you become aware of sales made by a third party, you must clearly manifest your opposition, in writing (registered letter with acknowledgement of receipt). undefined, I have encountered cases where a manager thought he was safe because he had not signed, but the courts condemned him due to his inaction.

For notaries and property professionals, this decision reminds us of the importance of verifying the seller's authority. A simple written mandate is not always sufficient; you must ensure that the principal (the SCI) has actually authorised the sale. In case of doubt, demand a resolution of the shareholders' meeting.

If you are in this situation, you must act quickly. The limitation period (time limit to bring legal action) is 5 years from the discovery of the problem. After that, you risk losing all recourse. The amounts at stake can be considerable: notary fees, penalties, moral damages.

Four tips to avoid this type of dispute

• Demand a written and verified mandate: Before signing a preliminary contract with a builder or intermediary, ask to see the mandate signed by the owner (the SCI). Check that it expressly mentions the power to sell and collect the price. If the mandate is doubtful, contact the owner directly.
• Do not pay a deposit without a guarantee: Demand that the funds be paid into an escrow account (blocked account with a notary) or to a professional subject to financial guarantee. In Anglet, a developer disappeared with the deposits; the purchasers took years to recover their money.
• For SCI managers: formalise everything: Never allow a third party to sell without an express mandate. If you discover unauthorised sales, immediately send a formal notice (registered letter) to the builder and inform the purchasers in writing. Your silence could be interpreted as approval.
• Keep all evidence of knowledge: Emails, meeting minutes, witness statements. If you are a purchaser, keep a record of all exchanges with the manager. In case of dispute, these elements can demonstrate that he knew and tacitly ratified.

Further analysis: related case law and developments

This 1973 decision is part of a consistent line. Already in 1965, the Cour de cassation had held that the principal's silence could amount to ratification (Civ. 1re, 2 March 1965, No. 61-13.742). More recently, the Commercial Chamber recalled in 2018 that tacit ratification requires certain knowledge and unequivocal intention (Com., 10 Oct. 2018, No. 16-26.589).

The trend of the courts is therefore to protect the third party acting in good faith, while requiring proof of the principal's knowledge. Today, with the widespread use of written communications (emails, SMS), it is easier to provide this proof. But beware: the judges remain demanding. Simple silence, without evidence that the principal knew and approved, is not enough.

For the future, it is likely that case law will evolve towards a stricter obligation for principals to be informed. Some recent decisions condemn companies that have not supervised their agents. undefined that managers must be proactive: not wait for problems to arise, but regularly monitor acts carried out on their behalf.

Summary and next steps

FAQ:

1. What should I do if I bought a property without apparent authority? Gather all evidence that the owner (SCI) was aware of the sale: letters, witnesses, conduct. Consult a lawyer to bring an action for ratification and specific performance.
2. Can the manager claim that he did not know? Yes, but it is up to him to prove it. If he attended meetings where the sales were discussed, or if he received emails, his ignorance is hardly credible.
3. What are the time limits for taking action? An action for avoidance on grounds of invalidity is time-barred after 5 years from the discovery of the defect. For a liability action, the time limit is 5 years from the damage. Do not delay.
4. Can I obtain damages? Yes, if you suffer loss (loss of deposit, various costs, moral damages). The SCI may be ordered to compensate you in full.
5. What does the SCI manager risk? He may be personally liable if he commits a severable fault (freezing funds, failure to react). He may also be ordered to pay damages.

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