Background
The Court of Appeal has decided that a property agent, Mr Barton, who was retained to sell a property for a target price of £6.5 million should be entitled to receive an introduction fee even though the terms of his engagement did not provide for any commission to be paid if the sale price was lower than £6.5 million.
The property had been marketed for some time and, if it had been sold for at least £6.5 million, Mr Barton would have been entitled to receive £1.2 million under the terms of the written retainer with his client, Foxpace. Mr Barton introduced a buyer which was willing to pay £6 million and Foxpace accepted this offer.
High Court Decision
Mr Barton claimed that he was entitled to compensation because Foxpace had been unjustly enriched by the sale of the property without making a reasonable payment to him for the work involved in finding the buyer.
Although Foxpace had undoubtedly derived a benefit from Mr Barton’s services, the High Court rejected a claim based on unjust enrichment because awarding compensation on this basis would have effectively re-written the contract between the parties which only provided for Mr Barton to receive payment if the property was sold for £6.5 million or more.
The judge did, however, consider that Mr Barton should be entitled to some compensation based upon Foxpace’s history of paying introduction fees and a total of £435,000 or 7.5% of the sale price was awarded.
Court of Appeal Decision
As the agreement made no provision for what Mr Barton would be paid if the property was sold for less than £6.5 million, he was entitled to bring a claim for unjust enrichment because awarding compensation on this basis would not contradict or serve to re-write the written terms. In spite of this, the Court of Appeal did not increase the compensation payable to Mr Barton and concluded that a payment of £435,000 was adequate.
Conclusion
This case further demonstrates that if a company or individual provides a service to another party and confers it with a benefit then it could be entitled to reasonable remuneration even if there isn’t provision for this in a contract.
Commercial contracts of any type can’t anticipate every eventuality but parties can reduce the risk of litigation by exploring what will happen if a particular outcome or objective isn’t achieved.
In this case, Mr Barton would have had no claim whatsoever if the contract had made clear that compensation would only be payable if the property sold for at least £6.5 million.