Commercial law for a creator or buyer
Our activity is an accounting firm that specializes in supporting creators or buyers of businesses of all sizes.
The creator or the buyer must manage not only the economy of his project, but also make essential choices on the legal, fiscal and social functioning of his future company.
"50 answers for a business creator or buyer" provides the elements most awaited by women and men who have a business project.
In this article, we will discuss the subject of commercial law. To find our other themes, do not hesitate to browse our other articles on the subject!
Here are the different points covered in this article in a simple and concise way:
– 3/6/9 lease or precarious lease?
– 3/6/9 lease or professional lease?
– The standard 3-6-9 commercial lease and maintenance costs
– The 3-6-9 commercial lease and authorized activities
– The 3-6-9 commercial lease and solidarity in payment of your successor
– Invoice form rules
– The customer note
- The estimate
– Should we ask for a deposit or installments?
– Cash box
3/6/9 lease or precarious lease?
A commercial lease called 3/6/9 comes under a 1953 decree, the provisions of which have been incorporated into the commercial code.
The principle is quite simple: the tenant can only break the lease at the end of the third, sixth and ninth year, hence its name “3/6/9”.
In return, the landlord cannot break the lease without fault on the part of the tenant (non-payment of rent for example).
The tenant (known as the lessee) can renew the lease at the end of the ninth year. The lessee therefore returns again for three periods of three years.
Renewal procedures are very strict. There are also very specific deadlines and modes of notice provided for in the lease.
The commercial lease 3/6/9 is an essential element of the goodwill because it allows to fix in the very long term the place of the trade. If the lessor (the owner) wants to break the 3/6/9 lease, he will owe the merchant heavy and very dissuasive compensation.
The 3/6/9 type commercial lease is by far the most common.
The 3/6/9 lease should not be confused with the precarious lease.
The precarious lease only lasts a maximum of two years. It is not renewable.
The precarious lease does not confer the property a right to the lease because it is precarious…
3/6/9 lease or professional lease?
The professional lease is intended for the liberal professions even if they are exercised in the form of a commercial company.
The professional lease lasts six years.
The lessor can break the lease at the end of six years with six months' notice. Which is inconceivable in a 3/6/9 commercial lease.
The protection provided by the professional lease to the tenant is therefore much less than the 3/6/9 lease.
The tenant may at any time give early notice subject to six months' notice.
Liberal professionals can opt for the commercial lease on the condition of explicitly specifying on the lease the will of the parties to submit to the legislation of the 3/6/9 lease.
The standard 3-6-9 commercial lease
and maintenance costs
The commercial lease provides for the distribution of the work of the rented premises between the lessee (the tenant) and the lessor (the owner).
This distribution is totally free. It results from the negotiation of the lease contract.
Major repairs (roof and walls provided for by article 606 of the civil code) must remain the responsibility of the owner (the lessor) for leases signed or renewed since November 2014.
Often the legal matrices foresee in advance who pays what in terms of maintenance and works. These matrices are fully modifiable. Negotiation between the lessor and the lessee is therefore essential.
The risk :
A badly negotiated lease at the level of the management of the works can lead the tenant to incur very substantial expenses and without compensation in the event of departure from the rented premises.
In the event of transfer of the business, a badly negotiated lease could harm the valuation of the fund. Your successor will understand that he will be subject to burdens that will harm his own economic performance.
The advice corner:
This negotiation is a balance of power between an entrepreneur who needs premises and an owner who needs to rent them.
To properly conduct this negotiation, you must be attentive when concluding the rental contract, then every 3 years that the lessor indicates:
– a provisional statement of the work he plans to carry out in the following 3 years, together with a provisional budget,
– a summary statement of the work he has carried out in the previous 3 years, specifying their cost.
The possible costs of maintenance are also to be put into perspective with the level of the rent.
The 3-6-9 commercial lease
and authorized activities
The commercial lease provides for the activity that you can carry out on the premises. This activity is freely negotiated subject to the regulations of the co-ownership, the subdivision or the district and of course good morals...
Once the activity has been determined on the lease, you can no longer modify it except to negotiate again with the owner. The latter may then ask you for a “despecialization” allowance! But the owner can also simply refuse, even with your good intention to pay him compensation.
Moreover, in the event of transfer of the goodwill, if your purchaser wishes to develop the activity, the owner may ask him for the same compensation! So, as your acquirer's resources are limited, it is likely that the money from the "despecialization" will reduce the sale price of your business!
The risk :
The risk is essential because an activity clause that is too restrictive can limit the development of your business.
In addition, a despecialization allowance can be high: several tens of thousands of euros in some cases!
The advice corner:
As you have understood, it is imperative to negotiate a very broad activity clause.
A statement of the type “the lessee may add to the activity… (The one which is authorised)… related or complementary activities” is common. But this clause often leads to conflicts of interpretation on the definition of a related and complementary activity.
If you can't negotiate an “all-business” type lease that solves the problem, don't hesitate to develop the authorized activities as much as possible, then to impose this short sentence relating to related or complementary activities.
The 3-6-9 commercial lease and solidarity in payment of your successor(s)
Many commercial leases provide for the following sentence: "The lessee will remain liable, jointly and severally with his assignee and all successive assignees, for the payment of rents and charges, due or falling due, and for the execution of the conditions of this lease". Which means that if your successors do not pay: you will pay in their place! And that until the end of the lease at least!
Solidarity comes into play even if the non-payment is voluntary.
This clause is not mandatory.
The law which limits the assignor's solidarity to three years for the benefit of the Lessor only applies to contracts entered into or renewed as of June 19, 2014.
You will be able to ask your successor for the sums you have paid. But how will he pay you back if he has no money?
The risk :
This risk is very substantial if you exercise as a sole proprietorship. Indeed, you are personally liable for the debts of the company.
If you practiced in SARL, SA or SAS which was dissolved and liquidated before the problem arose, it will be very difficult for your former lessor to act against you.
The advice corner:
It is very difficult to negotiate the solidarity clause in payment with the successors, the owners are very attached to it. In fact, to be released from the clause, the lease must specify that you are not joint and several!
Some owners even try to write that the partners of the SARL, SA or SAS are personally liable for this payment. This bond is a serious act. It is therefore necessary to refuse to sign this clause.
If you have signed a lease that provides for a solidarity clause, do not hesitate to insist that the purchaser of your business have a new lease redone. This new lease will replace yours. Therefore, the solidarity clause can no longer be implemented!
Form rules for invoices
The invoice is mandatory for any purchase of products or any service provided for a professional activity.
It is drawn up in at least two copies.
An invoice must meet mandatory information which are:
– the name of your company, your corporate form and your share capital if you operate as a company;
– the mention “managing tenant” if this is the case;
– the SIREN number of your company as well as the mention RCS and the name of the city where the company is registered;
- your address ;
– your intra-Community VAT identification number;
– the word “invoice”, the date and place of issue;
– a chronological invoice number;
– your customer's address;
– the precise identification of the product or service provided;
– the quantity of goods or services sold;
– the value excluding tax of each service or product sold, the total excluding tax per product;
– the total excluding tax by VAT rate;
– the mention “VAT at x%” and the calculation of the VAT;
– the amount including tax;
– the payment conditions, indicating a deadline, and the discount conditions;
– penalties in the event of late payment for individuals and professionals;
– for members of an approved management centre, the statement: “accepting payment by check in its capacity as a member of an approved management centre”;
– the mention of the ten-year insurance, the address of the insurance and the geographical area;
– the purchase order number if this document exists
– the billing address if it is different from the place of delivery.
But there may be other mandatory information. For example, in the case of intra-Community delivery, in the case of exemption based on VAT, export, intra-Community delivery, VAT on the margin…in the case of work with the start and end dates of the latter or quite simply if you are self-employed.
The risk :
The risk is twofold: fiscal and commercial. Deterrent fines are provided.
Poorly drafted invoices may strip you of your VAT regime with considerable sums to be paid. Poorly drafted invoices may also cause a rejection of accounting by the tax authorities.
In addition, in the event of a dispute with a client, the missing information may prove to be important.
The advice corner:
An invoice is a document as common as it is dangerous in its form. Depending on your activity, your VAT tax regime, the form of the invoice may change.
At the beginning of your activity, ask your accounting firm or a lawyer to check the formal requirements of your invoices. In the event of sales or exceptional achievements that go beyond your usual framework (export, delivery to the EEC, etc.), check whether specific mentions are not required.
Example of a standard invoice: be careful not all possible mentions are indicated.
SARL My Company
capital of 10 000 €
14 bis, avenue Fontaine
39800 POLIGNY
RCS Lons le Saunier 456 789 123
FR 25 456 789 123
Poligny, January 6, 2020
Invoice No. 542
SA My Client 15, rue du bon payment 39000 Lons le Saunier
Description quantity PU excl. VAT discount % total excl. VAT
Felt pen blue 100 €0,50 €50,00
Didon brand, ref 425.
Erasable black marker 50 €3,00 €150,00
White brand, ref 125
Total excl. tax €200,00
VAT 20% €60,00
Total tax incl. €260,00
Settlement date: January 31, 2020
A penalty of €40 and late payment interest corresponding to three times the legal interest rate in force on the date of the first unpaid amount will be due when the payment period is exceeded. Late payment interest is due from the day following the payment date shown on the invoice. This interest is 3 times the legal interest rate.
Discount of 2% net of tax in case of cash payment
The customer note
The customer note should not be confused with the invoice.
The invoice is mandatory between professionals.
A note must be issued for any service provided by a professional to an individual of an amount greater than or equal to €25 including tax.
For services of less than €25 including tax, the note is optional, but if the customer requests it, it must be given to him.
It should include (at a minimum):
– the date it was written;
– the name and address of the company;
– and its SIREN number followed, in the case of registration with the RCS, the mention RCS and the name of the city of registration (or in the case of registration in the directory of trades, the mention RM and the numbers designating the chamber professions concerned);
– the name of the customer, unless opposed by the latter;
– the date and place of performance of the service;
– the detailed account, in quantity and price, of each service and product supplied or sold, ie: name, unit price, designation of the unit and quantity supplied; however, the detailed statement is optional in the event of a detailed descriptive estimate, accepted by the client and in accordance with the work carried out;
– the total amount to be paid excluding taxes and all taxes included.
In the absence of one of the statements, the service provider is liable to penalties.
The advice corner:
It is advisable to keep them for 10 years.
The estimate
For removal companies, for those who carry out work in private homes, the estimate is mandatory.
For all other companies: working without an estimate means placing yourself in a situation of weakness vis-à-vis a misunderstanding of the thing delivered or the service provided, the prices, or even vis-à-vis a certain bad faith of certain customers. .
The estimate must describe the work and the products ordered. Indeed, the company must prove that the customer has placed an order for the products delivered or the work carried out.
As the customer must also agree on the price, the estimate must specify the price of the items sold.
Please note that a price indicated to an individual is deemed to be inclusive of VAT if it is not specified excluding VAT.
If additional work is required or agreed upon, an additional quote must be put in place.
Once the estimate has been made, you must be able to prove the customer's agreement. This one must specify his agreement on the estimate in a formal way.
An estimate must include the following information:
– company name, corporate form, capital, address, RCS and city of the registered office, SIRET of the company;
– the status of tenant-manager or manager-agent;
– the word “estimate” and the date of drafting of the estimate;
– the name and address of the customer;
– the place of performance of the intervention;
– the detail in quantity and price excluding tax, of each service, material and product and hours of work required;
– details of additional costs (travel, billing costs, etc.);
– the total excluding tax by VAT rate;
– the total including tax;
– the terms of payment of the future invoice;
– Insurance conditions for construction companies.
Be careful, do not forget the following three essential points:
– the period of validity of the estimate;
– whether the quote is free or not;
– the customer must bear the handwritten mention: “Estimate received before the execution of the work, read and accepted, on… (date)”
Should I ask for a deposit
or deposits?
The choice between deposits and installments depends on the trust the company has with its client.
Indeed, when the customer pays a deposit: he can opt out. But the deposit remains with the company.
If the consumer pays installments: he is required to complete the contract. That is to say, to buy the service or the goods and to pay the balance. The company could claim damages otherwise. And vice versa if the company fails.
On the other hand, in the case of the deposit, if the company withdraws: it pays double the deposit paid in compensation to the customer.
The risk :
If your client doesn't have the money to pay you, it won't do you much good to sue them to enforce the contract or get damages.
The advice corner:
The choice between deposit or down payment is not easy.
However, it seems that the down payment is more protective in the sense that it gives the company more recourse.
Deposits or installments, the main thing is that their amount is large enough to cover the costs incurred by the company if there is default by the customer.
The “cash box”
All merchants, sometimes craftsmen, have a cash box, hence the term “cash box”.
Cash management is an essential part of accounting and monitoring the management of the company.
The cash register chronologically records sales received in cash. It also records sales paid by checks and bank cards at merchants.
Since its balance must always be equal to the cash actually available, the cash register also records the expenses paid in cash.
Given its importance, since 2018, the law provides for the obligation for companies liable for VAT which record the payments of their customers by means of a cash register system, to use software that meets the conditions of inalterability, security, conservation and archiving of data for the control of the tax administration.
Failing to be able to prove that the software or the cash register system complies with the conditions provided for by law, by producing a certificate, the company is liable to a fine equal to €7.
If the company is not computerized (no electronic scale, no other software): paper cash keeping is still possible. But then the tax administration imposes very strict rules of form.
In particular, the cash register must specify the products sold so that they can be identified.
In the event of an exceptional discount, the discount must be indicated with the identification of the product concerned. In the event of a sale, the labels of the sale products must also be kept.
The tax authorities are entitled to reject your accounts if your company's cash is not conclusive.
If you have a cash register, the cash register rolls should be kept.
The advice corner:
The cash register is a good means of monitoring the management of the company. It is also a risk area in terms of embezzlement. The more complete the information on your cash book, the more effective your checks can be.
Please note: your invoicing software must also be certified. Under penalty of the same penalty
Example of cash box:
