The vendor company had instructed agents to sell properties on its behalf and had agreed to pay commission on completion of the sale. The sale was agreed with a prospective purchaser introduced by the agents. Before the sale was completed, the vendor company withdrew from the sale because of an objection by one of its directors. The vendor company later sold to someone who had not been introduced by the agents. The agents claimed their commission.
Held: A property owner was under no implied obligation not to deal with his property in such a way that the estate agent was deprived of the opportunity of earning the agreed commission. The House considered the use of implied terms.
Lord Wright said: ‘The expression ‘implied term’ is used in different senses. Sometimes it denotes some term which does not depend on the actual intention of the parties but on a rule of law, such as the terms, warranties or conditions which, if not expressly excluded, the law imports, as for instance under the Sale of Goods Act and the Marine Insurance Act. . But a case like the present is different because what it is sought to imply is based on an intention imputed to the parties from their actual circumstances.’
Viscount Simon LC said: ‘in contracts made with commission agents there is no justification for introducing an implied term unless it is necessary to do so for the purpose of giving to the contract the business effect which both parties to it intended it should have’.
Lord Russell said: ‘As to the claim for damages, this rests upon the implication of some provision in the commission contract, the exact terms of which were variously stated in the course of argument, the object always being to bind the principal not to refuse to complete the sale to the client whom the agent has introduced.
I can find no safe ground on which to base the introduction of any such implied term. Implied terms, as we all know, can only be justified under the compulsion of some necessity. No such compulsion or necessity exists in the case under consideration. The agent is promised a commission if he introduces a purchaser at a specified or minimum price. The owner is desirous of selling. The chances are largely in favour of the deal going through, if a purchaser introduced. The agent takes the risk in the hope of a substantial remuneration for comparatively small exertion . . There is no lack of business efficacy in such a contract, even though the principal is free to refuse to sell to the agent’s client.’ and
‘in my opinion there is no necessity in these contracts for any implication; and the legal position can be stated thus:- If according to the true construction of the contract the event has happened upon the happening of which the agent has acquired a vested right to the commission . . then no act or omission by the principal or anyone else can deprive the agent of that right; but until that event has happened, the agent cannot complain if the principal refuses to proceed with, or carry to completion, the transaction with the agent’s client’.
Judges:
Lord Wright, Viscount Simon LC, Lord Russell
Citations:
[1941] AC 108
Jurisdiction:
England and Wales
Citing:
Doubted – Prickett v Badger 1856
. .
Cited by:
Cited – Hughes and Another v Greenwich London Borough Council HL 26-Oct-1993
A headmaster’s occupation of a house in the school was not ‘for the better performance of his duties’, and so was not a tied house, and so he had the right to buy it. A term could not be implied into his contract to require him to occupy the house. . .
Cited – Brodie, Marshall and Co (Hotel Division) Ltd v Sharer 1988
The defendant resisted payment of his estate agent’s charges. The agency contract gave the agent sole selling rights, but the purchaser was found on the vendor’s own initiative. The terms made commission was payable if ‘we introduce directly of . .
Cited – G and S Properties v Francis and Another SCS 13-Jun-2001
The pursuers were contracted to sell a property with sole selling rights. The contract was terminable on two weeks notice. Notice was given, and another company engaged. A buyer confused the two agents and obtained details from the pursuer’s office, . .
Cited – John D Wood and Co (Residential and Agricultural Ltd) v Craze QBD 30-Nov-2007
The claimant estate agents sought payment of its commission. The defendant appealed refusal of his request for the claim to be struck out. The agency said that the agency’s standard terms applied under which commission was payable on exchange. The . .
Cited – Foxtons Ltd v Pelkey Bicknell and Another CA 23-Apr-2008
The defendant appealed against a finding that she was liable to pay her estate agent, appointed as sole agent, on the sale of her property. The eventual purchasers had visited but rejected the property. The agency was later terminated, and the . .
Cited – Glentree Estates Ltd and Others v Favermead Ltd ChD 20-May-2010
The claimant estate agents claimed commission on property sales. The defendant said that the agreement to pay commission had been waived.
Held: The sale triggered the commission. However the later agreement did work to vary the original . .
Cited – Vizcaya Partners Ltd v Picard and Another PC 3-Feb-2016
No Contractual Obligation to Try Case in New York
(Gibraltar) The appellant had invested in a fraudulent Ponzi scheme run by Bernard Madoff. They were repaid sums before the fund collapsed, and the trustees now sought repayment by way of enforcement of an order obtained in New York.
Held: The . .
Cited – Wells v Devani SC 13-Feb-2019
Mr W was selling apartments in a block of flats. Mr D, an estate agent, sought commission. W argued that D had not had signed his terms, and that therefore no contract existed. The court considered whether a contract had come into being when a major . .
Cited – Duval v 11-13 Randolph Crescent Ltd SC 6-May-2020
The Court was asked whether the landlord of a block of flats is entitled, without breach of covenant, to grant a licence to a lessee to carry out work which, but for the licence, would breach a covenant in the lease of his or her flat, where the . .
Lists of cited by and citing cases may be incomplete.
Agency, Contract
Leading Case
Updated: 05 October 2022; Ref: scu.183485