Case

Realty, a company dealing in land, leased space to Travel, a travel agency, for ten years at a fixed monthly rent. One year later, Travel's business fell off because of an economic recession. Realty agreed that Travel could pay half the agreed rent for the duration of the recession. Two years later, when the recession ended, Realty demanded that Travel pay the remainder of the originally agreed rent for the previous two years. Can it recover that amount from Travel?

Discussions

FRANCE

Whether Realty will recover half the rent in arrears for two years from Travel depends on how the agreement reached by the parties is construed. The parties have clearly reached an agreement. The question is, what exactly have they agreed? It is assumed that no variation to the lease has been made, since a lease must be modified in writing (law of 6 July 1989). Either they agreed to cancel Travel's obligation to pay the full rent during the recession or they agreed to postpone the date at which it is to be paid. In the first case, the agreement would be characterized under French law as the waiver of a debt (remise de dette), and in the second, as an extension of the term.

Waiver of a debt is governed by arts. 1282–8 of the French Civil Code. If the new agreement waives a part of the debt under scrutiny (half of the previously agreed rent, as long as the recession will last), then there is no way that Realty will be allowed to recover the money at some point in the future.