326 the enforceabilit y of promises

estate agency promised in writing to pay 4 per cent of the proposed price of a house just for the work of the agency and without regard to its success. The court held that the formalities of § 313 had to be complied with because the economic pressure on the client demanded the protection that these formalities were supposed to afford.25 An agency like Homes can claim its expenses (as distinguished from its fee) only if the contract expressly so provides (§ 652 II of the Civil Code26). As a compensation for these disadvantages, agencies like Homes are not under a legal obligation to find a buyer. They are not even obligated to make any efforts to do so.

greece

A brokerage contract such as this one is governed by arts. 703–8 of the Civil Code. The provisions of the Civil Code concerning brokerage are basically dispositive law. For certain categories of brokerage contracts there are special laws (for example, L 308/76 on brokers of civil contracts).

A brokerage contract is related to the contract of agency or mandate,27 but it is entered into for remuneration. In such a contract, which establishes a fiduciary relationship, the broker (who corresponds to the mandatary) promises to the other contracting party (the mandator) to find him an opportunity to conclude a contract that is in his interest in return for a fee promised to the broker (art. 703 of the Civil Code).28 The fee must be paid only if the contract is actually concluded as a consequence of the actions of the broker (art. 703 of the Civil Code). If a contract is not concluded but a promise to enter into one has been made, half the fee is due. The parties may agree, on the contrary, that the fee is due for the actions of the broker even if a contract is not concluded.29 The broker can also claim his expenses if the other party has agreed to reimburse him for

25BGH NJW 1971, 93.

26The agency (Makler) has a claim for expenses only if this was especially agreed. This is so even if the proposed contract is never agreed upon.

27The leading opinion in theory and in the case law considers brokerage as a mandate. P. Zepos, Law of Obligations (1965), Special Part, vol. II, 43–8; EfAth 2319/56 NoB 5, 258; AP 474/1979 NoB 27, 1473. However, some commentators believe that brokerage differs from mandate. Karasis in Georgiadis and Stathopoulos, Civil Code, art. 703.

28Article 703 of the Civil Code comes from art. 413(1) and (3) of the Swiss Code of Obligations and from § 652(1) of the German Civil Code. Kafkas, Law of Obligations, vol. A, art. 703. As far as procedural law is concerned, if the broker has been legally appointed then any disputes between him and the mandator are governed by art. 667 of the Code of Civil Procedure. In any other case the regular procedure is followed. Karasis in Georgiadis and Stathopoulos, Civil Code art. 703.

29AP 687/80 NoB 28, 2014; AP 180/66 NoB 14, 1017.

them. In that event, reimbursement is due even if a contract was not concluded (art. 703(2) of the Civil Code).

The mandator is free to recall his mandate at any time without giving a reason (art. 186 of the Civil Code). In that event, the mandator does not owe the fee unless the parties agreed otherwise. The revocation of the brokerage relationship is valid ex nunc. This means that the broker cannot earn his fee after revocation by taking an action that leads to a contract unless the mandator agrees to pay one and so enters into a new brokerage contract. The fee is payable if the actions of the broker before revocation lead to the conclusion of a contract.

Claude, then, had the right to revoke. Nevertheless, if he did so in a way that is contrary to good faith or bonos mores or the social and economic purpose of the right (art. 281 of the Civil Code) or if he did so negligently (art. 914 of the Civil Code), he must pay damages to the broker which would include the brokerage fee. For example, he would be liable if he revoked during a crucial period of negotiations with the intention of frustrating the broker’s rights when a contract is about to be concluded.30

In a brokerage contract, the mandator of a brokerage contract is free to employ other brokers unless the parties agree otherwise. An agreement for exclusive brokerage is valid.31 If the brokerage is exclusive, all the requirements that we have analysed above must also be fulfilled. Usually in this kind of brokerage it is agreed that the mandator is not free to revoke his mandate for a limited period unless he can prove that the contrary was understood (art. 288 of the Civil Code). He would still have the right to revoke on serious grounds. If the mandator employs other brokers or if he revokes his mandate before the time agreed or he revokes it in a manner contrary to good faith, he must compensate the broker for the damages suffered. These include the loss of the opportunity to earn the fee because the mandator violated his agreement. The broker could receive the same fee if he could prove that his actions would have led to the conclusion of the contract if the agreement had not been violated.32

scotland

The Scottish courts would approach this problem from a contractual standpoint. The solution will therefore depend on whether the terms of

30Karasis in Georgiadis and Stathopoulos, Civil Code, art. 703, no. 16.

31Ibid., art. 709, no. 21; Varthakokoilis, Analytical Interpretation, art. 703; Athens Court of First Instance 4029/82, Dni 25/849.

32Karasis in Georgiadis and Stathopoulos, Civil Code, art. 703, no. 21; N. Farmakidis, The Brokerage Contract (1989), 64–5, 90–1.

Case 15 the vendor’s position is stronger because no buyer has yet been found. Finally, courts have generally construed terms strictly against real estate agents in such cases.35

Regarding a claim for expenses incurred, a principal, such as Claude, is in general under no obligation to continue in business (which in this case means to continue trying to sell his house) for the sake of his agent (here Homes), but if on the true construction of the contract the principal has given such an undertaking, then he can be held liable in damages for breaching that undertaking.36 It is not clear from the facts whether Claude gave such an undertaking, but it would not be normal in such a contract (since the agent cannot force the vendor to agree to a sale, there is little point in forcing the vendor to continue offering the property for sale).

Would it matter if Homes had an exclusive listing? In Luxor, it appeared that the agent did not have an exclusive listing, but no weight was placed on this point there or in other cases. Arguably, in a non-exclusive listing the possibility that the agent may not earn a commission, even if he finds a willing buyer, is more evident from the start, but I do not think that great weight would be placed on this factor.

Claude’s position if Homes has found a buyer depends, again, on the precise terms of Claude’s offer. If Claude offered to pay Homes merely for finding a willing buyer, then he must pay if a willing buyer is found, since Homes has fully performed the requested condition. Courts require clear language before finding such an intention.37 The phrase ‘if it found a buyer’ is ambiguous (must a ‘buyer’ actually buy the house?), and the fact that the commission in the example was ‘5 per cent of the sales price’ would probably be taken as indicating that payment was, as in the Luxor case, conditional on an actual sale being completed. If so, then the Luxor ruling would again be applied. Note that it is clear from Luxor that it does not matter why Claude did not go through with the deal. There is no doctrine of good faith in English law that could be applied to a case such as this. The situation is unchanged if Homes is appointed a sole agent, except that if Claude sells through a different agent before the expiry of the agreement with Homes, then Homes can recover damages for breach (which damages would be calculated, it appears – though the law here is not much developed – by the amount of commission promised).38

37Fairvale v. Sabharwall [1992] 2 EGLR 27.

38Hampton & Sons Ltd v. George [1939] 3 All ER 627.