Agent awarded £435,000 in dispute over introduction fee
An agent who introduced a company to a buyer for one its properties has been awarded £435,000 for his services.
The issue arose after the agent tried to buy the property himself from the company. The deal fell through and he was left £1.2m out of pocket.
In order to recoup his losses, he proposed that the company pay him a £1.2m introduction fee in return for him finding a purchaser who was willing to pay £6.5m for the property.
The ultimate purchaser only paid £6m, and the company refused to pay the agent on the basis that the fee had been conditional on a purchase price of £6.5m.
The judge found that the agent’s contractual claim for an introduction fee failed because the property had been sold for £6m rather than £6.5m. However, he also stated that, had his judgement gone the other way, he would have decided that the value of the agent’s services should be set at 7.25% of the £6m purchase price, which amounted to £435,000.
The Court of Appeal overturned the judge’s decision that a fee was not payable.
It held that the agreement was that the agent would be paid £1.2m if the property was sold for £6.5m.
There was nothing in the terms that stated he should receive nothing at all unless that £6.5m purchase price was achieved. He was entitled to reasonable remuneration.
In deciding the level of the fee, the judge had been right not to place any weight upon the figure of £1.2m as that related to expenses lost in previous transactions rather than the services provided.
The judge’s figure of £435,000 was more appropriate as it was in keeping with agreements the company had made with other agents involved in the sale of similar properties.
Please contact Sing Li if you would like advice about the issues raised in this article or any aspect of contract law.