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Estate agents secure payment despite the agency agreement lacking any express term as to the timing of when the commission would become payable

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In the case of Wells (Respondent) v Devani (Appellant) [2019] UKSC 4 (13 February 2019)), the Supreme Court unanimously found that an estate agency agreement with the seller was complete and enforceable despite not expressly stating the trigger events when commission would become payable to the agent. The Court considered that since the parties clearly demonstrated an intention to creation legal relations, there was no doubt that (absent an express provision to the contrary) the only sensible interpretation was that the parties understood commission would naturally become payable upon completion of the sale. The absence of an express term in the agreement defining when commission payments would be triggered did not make the understandings between the parties so uncertain as to prevent the formation of an enforceable contract.

The decision overturned the previous finding of the Court of Appeal. The Supreme Court considered it unnecessary to imply a term into the agreement, although if it had been necessary to imply a term it would not have hesitated in holding that it was an implied term of the agreement that payment would fall due on completion of the purchase of the property by a person whom the estate agent had introduced.

The Supreme Court also rejected the suggestion that a general rule existed whereby it is not possible to imply a term into an agreement to render it adequately certain or complete to constitute a binding contract. The Supreme Court took the view that if the parties expressed a clear intention to be bound and to create legal relations, it may be acceptable for a court to imply a term into the agreement to give the agreement business efficacy, or to imply a term that would be so obvious that it "goes without saying", even where without the term the agreement would be regarded as incomplete or too uncertain to be enforceable.

This case underlines the importance of making sure that the parties intentions are properly captured in the terms of an agreement. Where it appears an agreement lacks certainty and in turn may not be enforceable, this case confirms that in certain circumstances the uncertainties in an agreement may be capable of remedy by implying the missing terms.

This article has been published as part of the latest issue of our Commercial Brief, detailed within the In Brief section.  To view the other articles within our Commercial Brief click here, alternatively view the other In Brief articles below:

ENDS

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