Question

A local estate agent, Abdulla, wrote to a villa owner, Omar, who was keen to sell his villa, and therefore accepting an offer from him to become Omar's agent. In the letter he sent to Omar, the local real estate agent, Abdulla pointed out that if he was able to find a willing and able purchaser, he would be entitled to a commission. The agent, Abdulla then introduced the owner to Salem, who said he was willing to purchase the villa, but Omar did not agree on the offer. Subsequently, Omar received a higher offer from another party and accepted it. When the agent, Abdulla attempted to claim his commission, he did so by stating to Omar that he had in fact introduced a willing and able purchaser. However, Omar disagreed with Abdulla and he refused to pay the commission.

1. Is Omar, the villa owner, correct in this situation in refusing to pay the agent’s commission to Abdulla?

2. When is the villa owner, Omar, legally bound to pay the local estate agent, Abdulla, a commission?

Note : Answers should be in Word Version

Answer 1

Issue : Abdullah and Omar have an agreement where Omar will pay a commission to Abdullah if he can provide a willing and able purchaser for his villa. Abdullah has attempted to claim a commission from Omar for introducing a potential buyer Salem to him. Even though the offer made by Salem was not acceptable to Omar and the sale did not go through.

Rule : As per the agreement, Omar must pay Abdullah if he can provide him with a willing and able purchaser. However, the potential buyer was not able to make an offer that was satisfactory to the seller resulting in a sale not going through.

Analysis : The buyer presented by Abdullah was willing but was not an able purchaser. Salem was not able to meet the offer requirements of Omar's villa and so his offer was refused. As there was no sale - Abdullah's purchases was not able to make a good enough offer - Abdullah is not entitled to a commission.

Conclusion : Yes, Omar was right to refuse to pay the commission to Abdullah. Abdullah provided Omar with a willing purchaser but not an able one and Abdullah ended up finding another buyer subsequently who was able to match his requirements.

Omar is legally bound to pay Abdullah a commission if he is able to provide a purchaser that is willing and able to meet the offer requirements of the seller, as per their agreement. A commission is usually based on the sale price of a product and so only if a sale goes through to the buyer provided by Abdullah, is Omar legally bound to pay a commission. If Omar does not accept the good offer made by Abdullah's buyer then he does not need to pay him a commission.

If the agreement had asked for a 'payment' of services then it could likely be enforced if Abdullah brings forward a purchaser who can meet Omar's price requirements.