Delays and remedies
Some contracts state that completion of the transaction should take place at the latest by a fixed date. Alternatively, the contract may stipulate that completion should take place within a specified number of days after the last of the conditions suspensives has been satisfied. If the contract is silent, completion must take place within “a reasonable time” (Cass 3 civ 10-4-1973). A period of two to three months from signature of the contract is not unusual.
Even if the contract stipulates that completion should take place on or before a fixed date, that date frequently passes by without completion taking place. A journey by you to France to complete the transaction in person may therefore be totally wasted or needlessly extended. There are many reasons why completion can be delayed. The most common examples of causes of delay in completion are the notaire not being in receipt of the answers to various searches and enquiries sent by him to various administrative bodies in France. These bodies are beyond the control of the notaire. Other common delaying factors are the postal and banking systems, and – if the buyer requires a mortgage – the notaire not being in receipt of funds from the lender.
In light of the above you should not therefore make any travel/holiday arrangements or book your removals etc. until the notaire has himself confirmed to you in writing that he requires completion to take place on a specified date at a fixed time and venue (‘completion appointment’). The notaire will usually only give you approximately two week’s notice of a completion appointment.
Any delay in completion beyond the contractual completion date is a breach of contract under French law (C civ Art 1611) entitling the innocent party at the discretion of the French courts to claim damages for any reasonably foreseeable financial loss suffered by him after the contract was made. This would therefore exclude any pre-contract survey fees. A claim in damages for a ‘ruined holiday’ or other loss that cannot be quantified in financial terms is likely to fail also.
Permitted losses could include interest payable on a mortgage or bridging loan and wasted French conveyancing fees. You are however unlikely to recover these or other costs (e.g. wasted travel expenses, the cost of removal or storage of your furniture, the cost of hotel or other alternative accommodation, carpets and curtains purchased etc.) if the notaire has not made a completion appointment with you. This is because the French legal system considers that these are expenses a prudent buyer should not incur before the appointment has been made.
An injured party cannot immediately terminate the contract unless it expressly states that ‘time is of the essence’ of the completion date (le délai fixé est de rigueur, donc impératif). In all other cases, to terminate the contract, the innocent party must serve a formal ‘notice to complete’ on the defaulting party. The notice will give a final date for completion failing which there will be no further time for the defaulting party. Time is now of the essence of the contract. If the defaulting party does not comply with the notice to complete, proceedings must be issued for the French courts to make an Order whereby the parties are put back into such a state as would have prevailed had the contract never existed.
Specific performance (exécution forcée) is a remedy by way of a discretionary order of the French courts that is intended to compel the defaulting party to perform and complete the contract. The remedy is available to both buyer and seller where the other party has committed a breach of contract and where an award of damages would be insufficient compensation for the party suffering loss. The remedy can be sought along with a claim for damages or on its own. However, in due course, the claimant must elect to select one remedy. If a judgment for one remedy is granted, it will preclude recourse to the other remedy.
Of course in the circumstances of a brief delay in completing of a few hours any loss sustained is unlikely to be such as to justify making a claim in the French courts for breach of contract. In any event, recourse to the French courts should always be viewed as a measure of last resort. As a result many contracts will include their own provisions which limit the amount of damages or other remedies that might be claimed. If the seller is in breach of contract, these provisions typically include the return to the buyer of the 10% deposit. If the contract contains a ‘penalty clause’ (clause pénale) the defaulting party may also be obliged to pay the innocent party a further sum of 10% of the agreed purchase price. The contract may also allow either party to claim compensation at the legal rate of interest (fixed by the French courts) on a daily basis until completion takes place. The buyer can also request that the contract contains a clause (indemnite d’occupation) whereby the seller will be required to pay a daily fixed amount of money to the buyer if completion does not take place on the prescribed date, unless the delay in completing has arisen as a consequence of any default by the buyer. However, because this clause imposes a burden on the seller and the notaire to complete on the contractual date, it is unusual for them to agree to it being included in the contract.
These provisions cannot prevent a party from making a claim in the French courts, either for damages and/or specific performance, but where such steps are taken the French courts any compensation paid under the contractual terms must be taken into account by the courts.
Imformation provided by Stephen Smith (France) Ltd