An agent (“W”) had initially introduced a buyer to a seller’s property at a show house, but the buyer was – although keen to offer – at that time unable to do so (a) because the price was too high and (b) because of other financial commitments.
Later on another agent (“D”) successfully negotiated a sale to the same buyer, after (a) the seller had reduced the price by R500.000, and (b) the buyer’s other financial commitments had fallen away. The seller paid D her agreed commission, but refused to pay W the 6% commission she claimed – hence the litigation.
Firstly, W needed to prove a mandate from the seller. She was unable to provide evidence of an express mandate, so instead relied on a “tacit” mandate. That, held the Court, meant proving “unequivocal conduct, by inference if necessary, that the parties did contract in the terms alleged”. Since W was unable on the facts to prove the terms of the mandate – specifically that the seller had indeed agreed to the commission rate she alleged (6%) – her claim had to fail.
Moreover, W couldn’t show that she was the “effective cause” of the sale. At the time of the introduction by W, the buyer was certainly “willing”; but not “able” to buy. And although that was later rectified through negotiation via D, W couldn’t prove that “the original introduction and visiting of the house was conclusive and dominating” in effecting the eventual sale.
Sellers: be alert to the danger of paying double commission in this sort of case – the courts have often awarded full commission to the introducing agent as well as to a later, intervening, agent. It was only on the facts of this particular case that the initial introduction was held insufficient to prove “effective cause”, and in any event an appeal against the finding is apparently being considered.
Agents: you need to:
- Take a clear written mandate from the seller, setting out the terms of the mandate including the agreed rate of commission, and
- If you have introduced a buyer who is initially unwilling and/or unable to make an acceptable offer, don’t give up. Follow up regularly in case circumstances change, and keep a clear paper trail in case you end up with a dispute.