by Tim O’Dwyer M.A., LL.B
There is an old joke about Lady Cul de Sac. She did not want the title, but there was no way out.
Julie James (not her real name) did not want to complete the contract she signed to sell her investment property after she received a significantly better offer from another party. When her buyer sued for specific performance there was no way out. Julie had to settle.
Then two estate agents claimed commissions on this sale. Only one agent (let’s call him “Alex”) actually sold Julie’s two-story commercial building. Trouble was, Julie had earlier engaged the other agent (let’s call him “Harold”) under an “exclusive” agreement. This meant that Harold was legally (but hardly morally) entitled to commission on any sale during the term of his engagement – whether he made the sale or not.
Harold’s agency was on foot on 24th May when Alex and Julie, unbeknownst to Harold, met at the property. Julie told Alex she was considering a purchase offer through Harold, but asked Alex if he could do better for her. Alex quickly approached a developer before arranging a meeting between himself, the developer and Julie on 27th May. A deal was soon done, with formal documents to be signed shortly.
Meanwhile Harold’s agency would continue until 26th June. Because Julie mistakenly thought this ran out on 1st June, she signed a “sole agency” agreement on 2nd June with Alex then, immediately afterwards, a sale contract with the developer. After the sale settled on 20th June, Julie had to pay Harold’s commission. When she refused to pay Alex’s commission, he sued.