Business-leasing management

By judgment dated 16th October 2017, the Monaco Court of Revision has recognized the mixt nature of the business-leasing management agreement : whereas it necessarily has a commercial nature for the manager - who executes commercial transactions as an usual profession - business-leasing management agreements can remain a purely civil agreement for the lessor, considering that granting the management of his business is not sufficient to give him a merchant status.

In the case at hand, defended by CMS Pasquier Ciulla & Marquet, the lessor of the business-leasing management contract was a civil company, to which the former owner of the business had brought its business as a capital contribution, after it had granted a business-leasing-management contract to a third party (the new manager).

The new manager wrongly assumed that he had found a legal loophole allowing him to challenge the validity of the business-leasing management agreement arguing that a civil company may not execute commercial transactions, expecting in this way to elude payment of the rental fees.

Monaco Court of Revision rejected his demands, using the abovementioned grounds, clarifying thus the nature of the business-leasing management agreement and approving the possibility for a non-merchant to be a party to such agreement, especially a civil company whose purpose cannot be a commercial purpose.

Beyond the purely legal significance of the consecrated solution, the abovementioned judgement confirms that a business-leasing management agreement can therefore, when the conditions are satisfied, be an interesting alternative to commercial real estate management.

Very frequently involved in business leasing-management agreement’s negotiation and drafting, as any other agreement enabling to promote real estate, CMS Pasquier Ciulla & Marquet remains available to study and secure the options available to manage industrial, commercial or professional real estate property.