Cases - Property Choice Ltd v Fronda

Record details

Name

Property Choice Ltd v Fronda

Date

[1991]

Citation

2 EGLR 249

Keywords

Estate agency

Summary

The plaintiff agents entered into a sole selling rights agreement with the defendant vendors. The defendants accepted an offer, subject to contract, from a private buyer. One of the clauses of a 'sole agency agreement' provided that, until the agreement was terminated, the defendants 'will not consent to sell the property to anyone not introduced by Property Choice'. The Court of Appeal held that the clause plainly and clearly created a sole selling agreement. The argument that this was inconsistent with the description of the plaintiffs as sole agents was not accepted. The meaning of the agreement had been explained to the clients and a copy had been left with them.

The contract continued:

'If this is contravened [the agents] will be entitled to the same commission in the same circumstances as if we had effected an introduction.'

The county court judge found the latter clause to be an unenforceable penalty. He therefore awarded damages for breach in respect of the acceptance by the vendors of an offer, subject to contract, from a private buyer. On appeal by the vendors, the Court of Appeal observed that the clause requires the court to determine whether the agents would have been entitled to commission had they, rather than the vendors, introduced the private buyer. As the vendors backed out of the deal with the private buyer, there would have been no entitlement to commission. And as the clause set out what is to be the remedy in the event of the breach, it precluded a claim for damages.

However, had the quantum of damages arisen before the Court of Appeal, Lord Justice Nichols stated that there would have been a 'very modest award'. This is because the county court judge had not taken account of the reason that the private sale was never concluded; that is, the defendants becoming unwilling to sell, resulting in the buyer having to give up and look elsewhere. There was no reason to believe that the result would have been any different in respect of the buyer that had been introduced by Property Choice.