An estate agent’s commission is normally payable upon completion of the sale, but that does not prevent parties from agreeing that it should be payable upon a different event. The question depends on the construction of the particular contract.
There was an agreement between the plaintiff estate agents and the defendant vendor that the agents’ commission would be payable as soon as a purchaser had signed ‘a legally binding contract’ within a certain period of time. The agents did introduce such a purchaser who signed the contract and paid a deposit but was unable to complete. The agents thereupon sought payment of their commission.
Held: The terms of the agreement were clear and the court would give effect to them, and they displaced the prima facie position. Jenkins LJ, with whom Somervell and Morris LJJ agreed, described that prima facie position in these terms: ‘The question depends on the construction of each particular contract, but prima facie the intention of the parties to a transaction of this type is likely to be that the commission stipulated for should only be payable in the event of an actual sale resulting. The vendor puts his property into the hands of an agent for sale and, generally speaking, contemplates that if a completed sale results, and not otherwise, he will be liable for the commission, which he will then pay out of the purchase price. That is, broadly speaking, the intention which, as a matter of probability, the court should be disposed to impute to the parties. It follows that general or ambiguous expressions, purporting, for instance, to make the commission payable in the event of an agent ‘finding a purchaser’, or in the event of the agent ‘selling the property’, have been construed as meaning that the commission is only payable in the event of an actual and completed sale resulting, or, at least, in the event of an agent succeeding in introducing a purchaser who is able and willing to purchase the property. That is the broad general principle in the light of which the question of construction should be approached; but this does not mean that the contract, if its terms are clear, should not have effect in accordance with those terms, even if they involve the result that the agent’s commission is earned and becomes payable although the sale in respect of which it is claimed, for some reason or another, turns out to be abortive.’
Jenkins, Somervell and Morris LJ j
[1952] QB 432
England and Wales
Cited by:
Cited – Foxtons Ltd v Thesleff and Another CA 19-Apr-2005
Estate Agents claimed their commission. They had originally acted as sole agents, but agreed to allow a multiple agency. Contracts were exchanged, but the vendor refused to complete. The vendor claimed that the variation left the agent’s contract . .
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 . .
Lists of cited by and citing cases may be incomplete.
Contract
Updated: 10 January 2022; Ref: scu.224914