Commercial Update 91 – When Will a Court Step in To Save You?

Please consider the following simple question:

‘If a seller of a property agrees to pay somebody a fee for introducing a buyer on the basis of a certain sum, but the property is then sold to that buyer for less than that sum, can the law fill the gap so that the introducer is entitled to reasonable remuneration for his services?’

This is what was before the High Court and then the Supreme Court in the case of Barton v Morris. To complicate matters, there was no written agreement, so what the terms of the contract were needed to be determined as a question of fact.

In the High Court, having found that the only term was that described above, the judge found that seller did not have to pay the introducer anything as what had been agreed in the actual contract did not require it.

The decision was appealed up to the Supreme Court, which agreed and said that there was no implied term entitling the introducer if he introduced a successful buyer but the property was sold for less than the certain sum, to any payment.

The court went further in comments, stating that there was nothing uncommercial about a party agreeing to receive a higher payment than usual if a condition is fulfilled while taking the risk that he will receive nothing if that condition is not fulfilled.

There were different opinions between the judges in the Supreme Court but the majority view was that, at least in this contract, silence spoke volumes and that on a literal approach, there was no need to rewrite the parties’ bargain.

The minority view expressed in the judgements feels more pragmatic, seeking to take into account what might by the norm in commercial agreements and that the literal word of a bargain is not the end.

What we do know still is that any contracting party should consider the terms of any contract carefully and get them in writing – it looks like the court will only imply a term into a contract if it is that term is clearly on the facts what the parties have actually intended, or if the contract is of a type into which the law implies certain terms and the parties have not excluded them.

Regards to all