Summaries

enforced, and if their agreement is not explicit, the court will resolve the matter by interpretation. In practice, most real estate agencies use a standard form contract which requires the owner to list with them exclusively and provides that if he decides not to sell the house, he must pay the agent 10 per cent of the fee the agent would have received had the house been sold for the price at which it was listed.

Spain: Under rules developed by the courts, Homes cannot recover if Claude changes his mind before it finds a buyer. If it finds a buyer and then Claude changes his mind, it can recover the commission.

Portugal: Claude is liable to Homes only if the listing is exclusive, in which case he is liable for the expenses that Homes incurred, and he will be liable for the commission as well if Homes proves it would have sold the property.

Italy: Claude is liable to Homes for its expenses if it has not found a buyer, and for its commission if it has. Real estate agencies in Italy generally insist that the listing be exclusive.

Austria: Special legislation provides that Claude is under no obligation to sell to a buyer that Homes finds, and that Homes is not entitled to its commission unless a contract of sale is actually concluded. If the contract is for an exclusive listing, then the parties are allowed to change this rule by express agreement so that Claude is liable for the commission if he cancels the contract without an important reason. Otherwise, the parties cannot change the rule even by express agreement.

Germany: Whether or not the contract is exclusive, Homes can claim its commission only if a sale is actually concluded, not if it merely finds a willing buyer. While Claude must act in good faith, he can change his mind without taking account of Homes’ interests. If the contract expressly provided that Homes could have its commission if it found a willing buyer, it would be valid only if it complied with the formalities for transferring real estate because, while it does not constitute a transfer, it creates economic pressure to make such a transfer. Homes cannot even claim its expenses. On the other hand, it is under no obligation even to try to find a buyer.

Greece: Claude does not owe the commission unless a sale is actually concluded. Up to then, he can change his mind for any reason. He must exercise this right in good faith: for example, he could not revoke as a contract is about to be concluded with the intention of harming the broker. These rules can be changed, however, by express agreement. Usually, if the parties agree that the listing is exclusive, they also agree that the owner is not free to change his mind for a limited period of time.

334 the enforceabilit y of promises

Scotland: Whether Claude is free to withdraw depends on how the contract is interpreted. If the agency is non-exclusive, it would seem clear that he may. If it is not and the agreement is silent on his right to withdraw, he would probably be deemed to be in breach. The promise might also be viewed as one subject to a condition, in which case Claude is in breach if he prevents the fulfilment of a condition in the contract.

England: Claude is free to withdraw and is not liable for Homes’ expenses or its commission. The promise is, again, an offer of unilateral contract which is accepted by performance, but a court will refuse to enforce, not merely because it was not accepted, but because the normal expectation of the parties would be that Claude can withdraw. In the case in point, the listing was non-exclusive, but the court attached no weight to that circumstance.

Ireland: The contract will be interpreted to allow Claude to withdraw without paying the commission. There is some authority for interpreting the contract to allow Homes to recover its expenses. Homes would be much more likely to do so if it could show that Claude expected it to incur expenses. If Homes was sole agent, that fact might show that the parties intended Homes’ expenses to be recoverable.

Preliminary comparisons

In Scotland, England, and Ireland, the effect of the agreement depends on its interpretation. The Scots reporter believes that if the agency were nonexclusive, Claude could withdraw before sale, but that if it were exclusive, he could not. The English and Irish reporters believe that he could withdraw before sale.

In Portugal, Claude is liable to Homes only if the listing is exclusive, in which case he is liable for the expenses that Homes incurred, and will be liable for the commission as well if Homes proves it would have sold the property.

In Belgium, Italy, and Spain, Homes could claim its commission if it finds a willing buyer, although in Belgium and Italy, if Claude withdraws before that time, he must pay Homes’ expenses. In France, if the agency is exclusive, the parties may agree to a penalty if Claude withdraws before Homes finds a willing buyer, although otherwise Homes can claim its commission only if there is a sale.

In other jurisdictions, supposedly, Homes can claim its commission only if a sale is actually concluded, and before then, Claude can withdraw (in the Netherlands, this result may be reached as a matter of interpreta-

tion). But the parties are permitted to contract around the principle in certain ways. In Austria, if and only if the agency is exclusive, the parties can agree that the agent earns his commission if the principal changes his mind without an important reason. In Germany, they can change the rule provided they do so in writing. In Greece, if the agency is exclusive, the parties usually agree that the principal cannot revoke for a period of time. In France, the principal who revokes may be liable in tort. In the Netherlands, although in principle the effect of the contract is a matter of interpretation, in practice, agencies use a standard form contract which would require Claude to pay a penalty of 10 per cent of its commission if he withdraws before sale.