Effectiveness of the non-recourse clause in the event of breach of the obligation to issue

By two judgments of 10 April 2025, the Court of Cassation clarified the scope of the non-recourse clauses in the event of a breach by the lessor of its obligation to deliver.

These judgments are part of a protective case law of the lessee, recalling that the contractual freedom in terms of non-recourse clauses cannot deprive the lessee of the fundamental guarantee attached to the delivery. They invite the drafters of leases to explicitly provide for the distribution of loads and work in order to avoid any litigation.

The unenforceability of the non-recourse clause in the event of breach of the obligation to issue (Appeal No.23-14.974)

In the first judgment (appeal No.23-14.974), a company renting premises for office use summoned the landlord for an interim appraisal, due to disorders related to water infiltration.

When the appointed expert submitted his report, the lessor attracted his insurer to the case and summoned the tenant, who had given notice in the meantime, in payment of the rent and arrears charges.

As a counterclaim, the tenant requested the reimbursement of part of the rents and charges and compensation for the damage related to the breach of the lessor’s obligation to issue.

The Court of Appeal rejected the tenant’s claim for compensation and declared the lessor’s guarantee appeal irrelevant.

According to the Court of Appeal, the non-recourse clause inserted in the lease stipulating that the lessee ” undertakes for itself and its insurers to waive any recourse against the lessor and its insurers due to the destruction or total or partial deterioration of all equipment, movable objects, securities of any kind and goods, due to the deprivation or disturbance of use of the leased premises and even in the event of total or partial loss of the means of exploitation “precludes any claim for compensation, on the basis of the breach of its obligation to issue by the lessor.

The tenant filed an appeal in cassation considering that the Court of Appeal had not correctly applied the provisions of Articles 1719 and 1720 of the Civil Code.

According to him, no contractual clause can fully relieve the lessor of his obligation to deliver, which lasts for the duration of the lease.

In accordance with Articles 1719 and 1720 of the Civil Code, the Court of Cassation recalls that the obligation of the lessor to deliver the rented thing to the lessee in good repair of any kind, to maintain the thing so that it can be used for the purpose for which it is intended and to make all necessary repairs, other than rental, so that the lessee can enjoy it peacefully.

It also recalls that the purpose of a non-recourse clause is not to derogate from the legal distribution of maintenance and repair work between the lessor and the lessee, so that it cannot have the effect of exempting the lessor from its obligation to issue.

Also, the Court of Appeal could not rely on a waiver of recourse clause relating to property damage and disturbances of enjoyment to exempt the lessor from its obligation to issue and reject the lessee’s compensation claims.

The appeal judgment is therefore quashed and annulled so that the tenant’s claims for compensation can be ruled on again.

Construction defect and gross negligence: the limits of the lessor’s exemption (Appeal No.23-15.124)

In the second judgment (appeal No.23-15.124), the tenant of commercial premises had concluded, on December 2, 2004, an agreement for the provision of the roof of the premises with an energy producing company, for the latter to install photovoltaic panels.

On 25 March 2013, a fire, originating from the photovoltaic panels, occurred in the leased premises.

The lessor has assigned liability and compensation to the tenant, its insurer, the energy producing company and its insurer and the company that sold the photovoltaic panels to the producing company.

The Court of Appeal declared the tenant and the energy company liable for the damage suffered by the lessor as a result of the fire and ordered them, in solidum with their insurer, to pay various sums to the lessor in compensation for the damage suffered.

It considered that the lessor had not breached his obligation to deliver and that the lessee had committed serious negligence bordering on fraud and demonstrating his inability to fulfil his contractual obligations with regard to the safety of the premises, which excluded the application of the non-use clause stipulated in the lease.

To this end, the Court of Appeal held that the lease stipulated the obligation for the lessee to take responsibility for the standardisation work and provided that the premises were taken in the state without the lessee being able to demand any repair or refurbishment from the lessor throughout the term of the lease, by express derogation from Article 606 of the Civil Code.

It also held that the tenant had been aware of the plans of the premises and had operated them for 14 years without carrying out security and ERP standardisation work.

The lessee and his insurer filed an appeal in cassation arguing that the clause, which imposes on the lessee the work of bringing the premises up to standard, does not exempt the lessor from its obligation to issue.

The tenant and his insurer criticized the trial judge for not having taken into account the fact that the premises were affected by a construction defect from the outset, to assess the breach of the lessor’s obligation to deliver and ultimately, to assess the application of the non-use clause inserted in the lease stipulating that the parties had waived any reciprocal recourse for the fire risk.

In accordance with Articles 1150 (in its version prior to the reform of contract law of 10 February 2016) and 1719 of the Civil Code, the Court of Cassation recalls that gross negligence assimilated to fraud does not allow the person to whom it is attributed to invoke a contractual clause limiting compensation for damage to the damages provided for by the contract, including when this limitation takes the form of a non-recourse clause.

The Court of Cassation recalls that gross negligence consists of extremely serious conduct bordering on fraud and denoting the incapacity of the debtor of the obligation to perform the contractual mission that he had accepted and specifies that it cannot result from the sole breach of a contractual obligation, even essential, but must be deduced from the seriousness of the conduct of the debtor.

It then states that, unless expressly stipulated otherwise, the work to bring the leased premises into compliance with the fire safety standards required for the exercise of the lessee’s activity is the responsibility of the lessor.

In addition, the Court of Cassation considers that when the leased premises are affected by a construction defect that makes them non-compliant with fire safety standards, it is up to the lessor to take charge of the upgrading work, unless a clause expressly stipulates that the work intended to remedy the non-conformities existing at the time of the initial issue is the responsibility of the lessee.

The tenant and his insurer also accuse the Court of Appeal of having limited the amount of compensation claims they have made against the energy producing company, given the gross negligence committed by the tenant.

On the basis of Article 1719 of the Civil Code, the Court of Cassation censured the appeal judgment because it considered that in order to limit the amount of the convictions pronounced against the energy producing company, the Court of Appeal should have checked, beforehand, whether there was an obligation on the tenant to carry out work to remedy the non-conformities of the premises already existing at the time of the initial delivery of the premises.

Case law summary: the crucial distinction between legal obligation and contractual intent

By these two judgments, the Court of Cassation provides details on the conciliation between the lessor’s obligation to issue and a non-recourse clause inserted in a commercial lease, by which the two contractors mutually waive the right to lodge an appeal against the other in various cases, and in particular when the premises are affected by disorders.

In the first judgment, the Court of Cassation recalled the extent of the lessor’s obligation to deliver and distinguished it from the non-recourse clause. It is true that the two concepts do not have the same nature or the same scope of application.

The lessor’s obligation to issue is a legal obligation arising from Article 1719 of the Civil Code, whereas the non-recourse clause, when inserted in a commercial lease, reflects the willingness of one or both parties, if reciprocated, to waive in advance the right to take legal action against the other party in the event of the occurrence of certain events, such as disorders for example.

This clause is usually stipulated in the “insurance” part of the commercial lease, in order to avoid the accumulation of insurance for the same type of disorder.

However, in the two judgments commented on, this clause had been invoked by the landlords to escape the compensation claims of the tenants, following disorders in the leased premises.

The Court of Cassation thus had the opportunity to recall that the stipulation of a non-recourse clause for the benefit of the lessor does not prevent the lessee from being held liable, on the basis of the obligation of delivery that weighs on him, throughout the execution of the lease.

In the second judgment, the Court of Cassation is particularly demanding insofar as the obligation of delivery weighs on the lessor even if the lease provides that the premises are taken in the state by the lessee, without it being able to require from the lessor any repair or repair throughout the duration of the lease, including the work listed in Article 606 of the Civil Code, and stipulates the obligation for the lessee to take responsibility for the standardisation work.

The lessor, whose leased premises contain a construction defect, remains liable for the work aimed at remedying this defect, even if his lease contains the aforementioned stipulations.

In order to be able to require the tenant to take charge of the work to bring the premises into conformity with an existing defect at the time of the initial handover of the premises, this situation must be provided for and organised by the lease.

In the event that disorders occur in premises that are not affected by a defect, in order to be able to escape the non-recourse clause and require the lessee to take responsibility for the restoration work, the lessor must demonstrate that the disorders are the consequence of the lessee’s gross negligence.