Explanation of Article 437
The article addresses the ruling on subleasing and the ruling on the tenant's assignment of the lease contract to others. The difference between them is that in subleasing, there are two independent contracts: the original lease contract between the landlord and the tenant, and the sublease contract between the original tenant and another tenant. The relationship between the original tenant and the subtenant is determined by the sublease contract, which may differ from the original contract in terms of duration, rent amount, or contract terms. The rights and obligations under both contracts—the original lease and the sublease—remain in effect between their respective parties.
As for the assignment of the contract, there is only one contract, which is the original lease contract between the landlord and the tenant. The tenant assigns their rights and obligations in this contract to the assignee, and these rights and obligations become between the landlord and the new tenant (assignee).
The default is the permissibility of subleasing and the permissibility of assigning the contract to others, whether the assignment is for consideration or without consideration.
The article stipulates that the tenant may not sublease the leased property or assign the lease contract to others without the landlord's consent, whether by prior permission for the transaction or subsequent approval. This is because, although the lease contract is not fundamentally based on personal consideration, the tenant's identity is often taken into account. For practical reasons, the system has moved to restrict the tenant's rights in this regard while expanding the scope of consent as will be explained. The rule established in the article is merely supplementary to the contracting parties' intent in the absence of any indication to the contrary. If it becomes clear from the circumstances of the contract that the landlord has waived this right and the tenant's identity was not considered at the time of contracting, the landlord's right to prevent is forfeited.
The general permission in the article indicates that the landlord's consent can be valid at the time of concluding the sublease or assignment contract, where the landlord is aware of the subtenant's or assignee's identity. It is also valid for the consent to be granted in advance at the time of the original lease contract or afterward in a subsequent agreement, even if the landlord is not aware of the subtenant's or assignee's identity at the time of consent. It is also valid for the consent to be a subsequent approval after the sublease or assignment contract is concluded, making the contract enforceable against the landlord not from the time of approval but from the time the contract was concluded.
There is no specific form required for the consent; it can be written or verbal, explicit or implicit, whether prior or subsequent to the transaction. Examples of prior implicit consent include when dealings between the contracting parties or a specific custom indicate that the landlord's failure to state a prohibitive condition at the time of contracting is evidence of consent. Examples of subsequent implicit consent include when a long period passes after the sublease or assignment contract with the landlord's knowledge without objection, or when the landlord accepts rent from the subtenant or assignee.
Consent can be implicit even if the landlord required it to be in writing, as the landlord may waive any condition stipulated in the contract. The requirement for writing is for proof, not for the validity of the consent, and the burden of proof lies with the tenant.
The scope of prohibition in the article does not include actions and transactions that do not constitute subleasing or assignment of the contract. It does not include cases where the tenant lends the leased property to others, houses a friend without them being a tenant, houses a relative or a follower instead, or brings in partners to exploit the leased property as long as they are not subtenants, unless there is a prohibitive condition against these actions.
The article ensures that the landlord is not abusive in exercising their right to prevent the tenant from subleasing or assigning the contract. Examples of abuse are stated in paragraph (2/b) of article (29): (If the benefit from exercising it—i.e., the right—does not correspond at all with the harm caused to others). If the tenant has a need for subleasing or assigning the contract, and it is evident that the landlord has no interest in preventing the tenant from doing so and is only insisting on this right out of obstinacy, and there is no prohibitive condition between them, the court may, at its discretion, prevent the landlord from abusing their right and authorize the tenant to sublease or assign as long as they are jointly liable with the assignee in their obligation as determined by article (256).
The article's provision that subleasing or assignment is subject to permission and approval indicates that the prohibition is not of public order, and the penalty for violation is not nullity, as a void contract cannot be ratified. Instead, the tenant is considered in breach of their contractual obligation, and general rules apply. The landlord may seek specific performance by requesting the subtenant or assignee to vacate the leased property, or the landlord may request the termination of the original contract with the original tenant. Judicial termination rules apply, and the court may, at its discretion, refuse the termination request and suffice with obligating the subtenant or assignee to vacate the property if the breach does not warrant termination. However, if the original contract contains a resolutory condition, the court cannot refuse the termination request, as the resolutory condition must be enforced, and the court's authority is limited to verifying the occurrence of the condition upon which termination is contingent.
Whether the landlord seeks specific performance or termination, they may claim compensation from the tenant for damages resulting from the breach of their obligation.
Related To
Article 437
The lessee may not sublease the leased thing in whole or in part nor assign the contract to a third party without the lessor’s authorization or ratification.