Sellers were not entitled to retain the deposit on withdrawal of the purchasers due to procedural non-compliance, a French court has ruled.

In a case recently heard in the French Supreme Court, the Cour de Cassation, a couple agreed to the sale of their apartment to two purchasers for the sum of €553,000.

The sale and purchase contract (promesse de vente) was duly signed by both sellers and purchasers on 10th May, with completion to take place no later than 5th August 2010.

The contract contained a penalty clause of 10% of the sale price in the event that the purchasers did not proceed and the purchasers handed over €20,000 as a deposit.

The scheduled completion date having passed, the sellers eventually brought an action in the courts to obtain enforcement of the penalty clause.

In response, through their solicitors the purchasers claimed that the sale and purchase contract was itself null and void due to irregularities in the delivery procedure.

In French law, purchasers are granted a 10-day cooling-off period, the starting point for which is the following day on which the contract is placed in their hands.

The practice of estate agents and notaires in this matter does vary: some hand over the contract at the time of signature, in the process obtaining a written acknowledgement of receipt, whilst in other cases the contract is sent to the purchasers by recorded delivery.

In this case, following the signing process with the estate agents, a copy of the contract was sent out by recorded delivery to each of the purchasers, who were husband and wife.

The contract was duly delivered by the French post office, and a signature confirming receipt of both copies was obtained from the wife. At the time of delivery the husband was absent.

The couple argued in court that as the husband had not been personally notified, and as the contract contained no clause authorising one to act for the other, the cooling-off period had not started.

Their argument was accepted by the judges and the contract was, therefore, declared null and void.

The sellers sought to obtain damages from the estate agents for a failure in procedure, but the court ruled that they could not be held accountable for the actions of the postal delivery service.