Contract giving estate agent sole selling rights – Whether purchaser under contracts exchanged after expiry of period “introduced to” client – Provision not expressly identifying person by whom purchaser introduced – Whether agent entitled to commission – Estate Agents (Provision of Information) Regulations 1991
In July 1994 the defendants instructed the plaintiff, an estate agent carrying on business in Leeds, to act as their agent with sole selling rights to sell Norwood House Residential Home, which they owned. A contract was entered into which included a statement in accordance with the plaintiff’s obligation under regulation 5 of the Estate Agents (Provision of Information) Regulations 1991, the regulations, to explain the effect of the term “sole selling rights”. Para (a) of the statement gave an unqualified right to the full commission during the period of sole selling rights “even if the purchaser was not found by us but by another including yourself”; and para (b) covered the exchange of contracts after the expiry of the period in which case the commission was payable if the purchaser was a person “who was introduced to you during the period or with whom we had negotiations about the property during that period”. The defendants were not satisfied with the plaintiff’s marketing efforts. The agency was to last for a minimum of six months, so although the defendants gave notice in November to terminate, it continued until January 14 1995. In October 1994 the defendants read a newspaper advertisement placed by Mr and Mrs G stating that a residential nursing home was wanted. On January 16 1995 the defendants exchanged contracts for the sale of Norwood House to Mr and Mrs G. The plaintiff commenced proceedings claiming from the defendants either commission or damages for alleged breach of contract. The judge decided that the plaintiff was not entitled to commission and the plaintiff appealed contending that “introduction” in para (b) meant “introduced by anyone”.
Held The appeal was dismissed.
1. The regulations contained definitions, whose purpose was to inform the client clearly the circumstances under which he would become liable to pay commission, and which were to be construed from the standpoint of a reasonable client. The second phrase in para (b), “with whom we had negotiations about the property during that period”, dealt with the situation where the agent had negotiated with the relevant person during the period. Thus the person had not been introduced by the agent, but the agent had been involved in an attempt, later successful, to sell the property to that purchaser. The first phrase also contemplated that the agent had done something which was that, in contrast to the second phrase, he had introduced the relevant person to the client. Thus the introduction was confined to introductions by the agent.
2. The task for the court was the construction of the contract. However the relevant words in para (b) did not make it clear that the client was still to pay commission in respect of an exchange of contracts outside the period when the introduction was not effected by the agent. Those words therefore did not mean “introduced by anyone”. A reasonable client reading the document would understand the words to mean “introduced by the agent” and the judge had reached the correct conclusion.
Brian Riley (instructed by Howe Roche & Waller, of Stevenage) appeared for the appellant; Antonia Morris (instructed by Chivers Walsh Smith Irvine & Co, of Bradford) appeared for the respondents.
