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Seller Broke Contract with Estate Agent

A seller sought to avoid payment of the sales commission to the agent, but had to pay up in the end.

In a recent case in the French courts, a seller entered into an exclusive contract with an estate agent for the sale of their property.

The contract stated that the client "shall refrain, during the term of the mandate, from negotiating either by himself or by a other intermediary, the sale of the goods designated on page 1 and undertakes to direct all requests which are addressed to him personally to the agent."

Under the penalty clause, in the event of non-compliance by the client they would be liable for a compensatory lump-sum equivalent to the amount of the remuneration provided for in the contract.

The duration of the contract was for a period of three months.

The agent published the sale details on-line, in an advert that was seen by the buyers, who knew the property and who made direct contact with the seller.

A subsequent visit to the property resulted in an offer by the buyer the following day for the sum of €180K, which was below the advertised sale price.

At the end of the three months the seller terminated the contract with the agent.

Several days later they signed a sale and purchase contract with the buyers, and completion duly took place three month later.

In court the sellers claimed they had informed the buyer that they had an exclusive contract with the agent, whom they also notified of the agreed sale. They also claimed they would have no interest in negotiating a sale at a lower price than that stated in the contract with the agent.

However, the court considered that having allowed the buyer to visit the property and make an offer, without the estate agent acting as an intermediary, was in breach of the exclusive contract they had with the agent.

They considered that from the short-period that elapsed between termination of the contract and signing of the sale agreement it was clear negotiations had been carried out between sellers and buyers in violation of the exclusivity clause binding the sellers to the agency.

Accordingly, the court decided that the seller should pay €7,000 in damages to the estate agent, corresponding to the amount of the commission provided for in the contract.

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This article was featured in our Newsletter dated 04/09/2020

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