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Leisure Law
NEWSFLASH August 07
Agent does not need to be "effective cause of sale".
The Facts
In the recent case of Dashwood –v- Fleurets Limited [2007] All ER (D) 67, the vendor entered into an agreement whereby the agent had sole selling rights in relation to a public house. The terms of the agreement entitled the agent to commission if the property was sold to a purchaser who had been introduced during the sole selling rights period.
The marketing was put on hold before the agreement was terminated. Whilst the marketing was on hold, the pub continued to display the agent’s “for sale” board, particulars were sent out to interested parties and anyone wanting details was told the marketing was on hold.
The agent was dis-instructed and the pub was sold through a subsequent agent. However, the purchaser had seen the “for sale” board, obtained particulars from the agent and called the agent. He had been told the marketing was on hold.
The agent sought its fee from the vendor based on the terms contained in the agreement, which allowed the agent to recover its fee if a purchaser had been introduced during the sole selling rights period even if the agreement was subsequently terminated.
Usually an agent is only entitled to its commission if they are the effective cause of sale. There is no legal definition of “effective cause of sale”. Any case is determined on its facts.
The trial Judge stated that on the facts, the agent was the effective cause of sale and ordered the agent to pay the fee.
The vendor appealed saying that the agent was not the effective cause of sale. The agent cross appealed on the basis that their terms and conditions meant that they did not have to be the effective cause of sale.
The Outcome
The appeal Judge accepted that the terms clearly set out when the agent was entitled to its fee and that those requirements were met. There was no requirement for the agent to be the effective cause of sale. The Estate Agents (Provision of Information) Regulations 1991 did not require the implication of an effective cause of sale test.
On the agents terms, they did not have to introduce and negotiate with the purchaser. A mere introduction was sufficient to entitle the agent to its fee.
The Implications
Agents should ensure that their terms and conditions are drafted to ensure that there is no requirement to show that they were the effective cause of sale.
Vendors should think twice before dis-instrucitng agents or attempting to conclude a sale without the knowledge of the agent. Many agents check the progress of sales in relation to which they have been dis-instructed either from press releases on the “deals done” pages or from HM Land Registry.
If you would like to discuss the services that we are able to offer you and your clients, please contact the author of the article, Alison Hancock, at alisonh@sghlaw.com or telephone 0207 544 5657
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This Newsflash is issued by the Leisure Law & PropertyManagement Department. Should you require further help and advice please contact Alison Hancock at alisonh@sghlaw.com, or your usual contact at SGH on 0207 544 5555. This newsflash summarises complex case law and should not be relied upon in any way as a definitive statement of the law
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