Cases - Scheggia v Gradwell

Record details

Name

Scheggia v Gradwell

Date

[1963]

Citation

3 AII ER 114

Keywords

Estate agency - commission

Summary

The plaintiff instructed the defendant to find someone to buy his restaurant business, held under a lease. The terms of the agency agreement provided that commission was due

'if within three months any person introduced by the agents enters into a legally binding contract to purchase the said business and property...'

The agent found a person who signed a contract and paid a deposit. The contract was subject to a standard condition that the landlord's consent was required. If the consent could not be obtained, the vendor (tenant) could rescind the contract. Unfortunately, the prospective purchaser's bank reference did not satisfy the landlord, and when the landlord asked for further references, he failed to provide them and withdrew from the purchase. The agents claimed commission, but the plaintiff contended that, as he was never in a position to enforce specific performance of the contract against the purchaser, it was not a legally binding contract.

By a majority, Lord Denning dissenting, the Court of Appeal held that the commission event had been satisfied. A legally binding contract had been entered into, as required by the agreement. Under the terms of the agreement, it was not necessary to establish that there was a purchaser in the sense of someone who completes the purchase, or someone who was ready, willing and able to complete. Even though specific performance was not available, the contract was legally enforceable; the repudiation was a breach of the contract, and could be enforced by a claim in damages. It was distinguished from the case Peter Long & Partners v Burns, where the contract could neither be enforced by specific performance nor damages because of misrepresentation.

If it had been established that a man of straw had been knowingly or carelessly produced, the result would have been different. There is an implied term that an agent must act in good faith and exercise reasonable care and skill (Keppel v Wheeler). But no such evidence was provided.