RIGHTS OF AN ESTATE AGENT TO EARN COMMISSION.

I once wrote an article titled Breach of Agency Agreement. There, I explained the relationship between the principal and the agent. A recap is therefore necessary to lay a foundation for the above subject matter.

An agency agreement is the creation of a contract entered into by mutual consent between a principal and an agent. A principal is a person that grants authority to an agent to act on behalf and under the principal’s instructions.

Therefore, the law governs and regulates the legal relationship where an agent deals with a third party for the principal. The relationship between the agent and the principal is usually determined by both parties agreeing to the relationship.

In an agency relationship, one of the duties of the principal is to pay remuneration to the agent. This however depends on the agreement by both parties.

In a situation where the sale of the principal’s property has been sold by the principal not the agent. The court will be reluctant to make the principal pay such agent commission over such property.

Where the agent is to be paid commission in the event of him introducing a purchaser.

In this instance, it goes beyond just introducing the purchaser. An agent is entitled to a commission if after introducing a purchaser, such purchaser is willing to purchase.

Also, such purchaser is willing sign a legal contract binding him after or before the purchase has been made. If this has not happened, the agent might not be entitled to any commission.

 In a laid down principle by Lord Denning L. J. on estate agent commission. This provides the background for the interpretation of an estate agent’s contract with his principle. These principles goes thus.

• The agent is only to receive commission if he succeeds in effecting a sale.
• Any language that is used in the contract will have this effect. As long as it shows that the agent is to introduce a purchase
• If the agent is to be given commission on offer only, he must use a clear and unequivocal language.
• The normal arrangement, the common understanding of men is that the agent’s commission is payable out of the purchase price.
• If a binding contract of purchase signed by the principal, and the third party is repudiated by the principal. He is still liable to pay commission. This is not because it has been earned , but because it is his fault that the sale was not completed.
• No commission is payable if it is the third party not the principal, who has defaulted on a binding contract. Unless the principal sues for specific performance and gets damages, then he might be liable to pay commission from such damages.

For further advice and assistance, Please do not hesitate to email us at ibejulekkilawyer@gmail.com or call 08034869295.