Cases - Chris Hart (Business Sales) Ltd v Mitchell

Record details

Name

Chris Hart (Business Sales) Ltd v Mitchell

Date

[1996]

Citation

SLCR 68

Keywords

Estate agency

Summary

Sole agents were engaged to find a buyer for the vendors' hotel. During the term of the agency the agents failed to find a buyer, so the vendors terminated the agency, advertised the business and subsequently found a buyer themselves. The agents claimed commission on 2 grounds. First, that the contract provided for commission if they had 'contributed in any way to that sale'. The agents claimed that, as the vendors had based their advertisement on the agents' particulars of sale, they had contributed to the sale. The court found no evidence to show how far this had contributed to the actual sale, if at all; it was not sufficient to contribute in some way to the selling process.

The second ground was based on a clause in the contract which required the vendors to submit any offer to purchase to the agents before sending it to their solicitors. This applied even after the agency contract was terminated. The purpose of this was to enable the agents to assess what contribution they had made to a sale so as to justify a claim for remuneration. In the event of failure to submit any such offer to the agents, their whole remuneration and outlays would be payable (nearly £7,500). So the agents claimed they were entitled to payment.

The sheriff principal rejected the agent's claim that the clause in question was a provision entirely separate from the matter of damages. On the contrary, it was 'nothing more or less than a stipulation relating to damages'. And as it was not a genuine pre-estimate of the loss the agents would suffer if they were not informed of the sale, it was a penalty and so unenforceable.