Cases - Bairstow Eves London Central Ltd v Smith
Record details
- Name
- Bairstow Eves London Central Ltd v Smith
- Date
- [2004]
- Citation
- EWCH 263 (QB)
- Legislation
- Keywords
- Estate agency - Unfair Terms in Consumer Contracts Regulations 1999
- Summary
-
The parties had entered an estate agency agreement under which the so-called 'standard commission rate' was 3% plus VAT. However, there was also an 'early payment discounted commission rate' of 1.5% plus VAT. This rate applied if payment in full was made within 10 working days of completion of the sale. The vendors instructed their solicitors to pay the agent's fee out of the completion monies, but the solicitors inexcusably failed to pay the full amount and there was a shortfall of £387 out of a total bill approaching £3,000. The £387 remained unpaid and so the claimant agents eventually claimed commission at the 3% rate less what had already been paid. By the time of the court hearing, the £387 had been paid. The county court judge found the provision for the 3% rate to be an unfair term under the regulations.
The issue for the High Court on appeal was whether the 'standard commission rate' was, in reality, a default provision, or whether it was the real commission rate with the vendors having an option to pay the lower amount. If the latter, it would be a term as to price and so beyond the scope of the regulations. On the evidence of the negotiations and the fact that the claimant would have been unlikely to obtain business at 3%, the High Court held that it was a default provision. Therefore the regulations applied and so the finding of the county court judge that it was an unfair term was upheld. He had described the provision as a trap for consumers as it could operate where there was simply a misunderstanding between them and their solicitors, as in the case itself. It was, he had said, 'not a good standard of commercial morality or practice'.