Estate Agents “Sole Agency” Commission Lost

Mon 21st Nov 2011

The simplest of mistakes can result in significant loss, easily avoided, and as seen in the case of Great Estates Group Limited –v- Digby, Court of Appeal 13th October 2011.

The Estate Agent signed an agreement with the Defendant described as “A Sole Agency Agreement”. The Claimant introduced three potential buyers on the day of signing but on the next day the Defendant met another potential Buyer who made a higher offer and proceeded to contract and completion. Another Agency was involved in that process and the Defendant paid commission to that other Agency.

The Estate Agent claimed there had been a breach of the Agency Agreement with the Defendant and sued for loss of commission.

The Court of Appeal confirmed that where an Agency Contract uses the expression “Sole Agency” there is an obligation on the Estate Agent to inform the Client what “Sole Agency” means and the Agreement having failed to explain the significance and effect of such expression the Estate Agent was not entitled to enforce the Agreement and thus was unable to recover commission.

The Estate Agents Act 1959, Section 18 and the Estate Agents (Provision of Information) Regulations 1991, Regulation 5(b) gave rise to the obligation because Parliament had concluded that the ordinary Client could not reasonably be expected to determine for himself the significance and effect of such terms as “Sole Agency” unless the Estate Agent provided a sufficient and accurate explanation.

The moral of the case is to ensure that Terms and Conditions of Agency Contracts are clear, unambiguous and comprehensive.

Coodes Business Services Department can advise upon such matters as Agency Contracts as well as Commercial and Employment Contracts more generally. We would be happy to come out and see you as well as offer a FREE contract health check.

For further information contact Peter Lamble, Partner,

Mon 21st Nov 2011

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