Who did you get your instructions from?
Catching up on paperwork may not be your top priority, but a recent case serves as a warning to estate agents who are less than diligent in this respect.
In Day Morris Associates v Voyce [2003] EWCA Civ 189; [2003] PLSCS 41, the agent was consulted by an estranged wife in respect of a jointly owned home. The agent dealt only with the wife. It sent her a standard letter of engagement setting out its terms. However, although the wife allowed viewings by around 16 prospective purchasers, she neither signed the letter nor verbally accepted the agent’s terms.
One of the viewings resulted in interest from Ms L, but the wife did not accept her subsequent offer. Rather, the wife and husband resolved their financial dispute by way of a court order and the husband took over the sale of the house. He contacted Ms L and agreed a sale price. Ms L purchased the property and the agent sent an invoice to the wife. The wife refused to pay and denied having any contract with the agent. The agent sued, arguing that its terms had been accepted by “conduct”. This contention failed in the county court. The judge did not directly deal with the “acceptance by conduct” point. Instead, he said that the choice of purchaser was entirely that of the husband, and that the wife was therefore exonerated from payment. The agent appealed.
The Court of Appeal had to deal with the “acceptance by conduct” point. It ruled that “a contractual acceptance has to be a final and unqualified expression of assent to the terms of the offer. Conduct will amount to an acceptance only if it is clear that the offeree did the act in question with the intention of accepting the offer”. Although “the case was surrounded with difficulty and uncertainty largely of [the agent’s] making”, the Court of Appeal decided, on balance, that the wife’s acquiescence in the process of marketing had signified her acceptance of the agent’s terms. The agent therefore recovered its commission.
The agent was perhaps fortunate that it could point to a “process of marketing” that had included showing a large number of potential purchasers around the property and distributing written particulars of sale. Whether it would have been as fortunate if Ms L had come onto the scene at an earlier stage is debateable. If no contract had existed, the agent’s only chance of recovering any money would have been to seek a reasonable fee on the basis of quantum meruit (a reasonable sum for services rendered).
The Court of Appeal did not resolve the quantum meruit issue. The quantum meruit argument is fraught with difficulty. Section 18(1) of the Estate Agents Act 1979 applies to any person who “enters into a contract with another… under which the agent will engage in estate agency work…”. What if there is no “contract”? It is thought unlikely that parliament could have intended to allow an agent to be better off without a contract than with one.
What lessons can agents draw from Day Morris?
(1) Check whether you are dealing with all legal owners of a property.
(2) Address your retainer letter to each of these owners.
(3) Ensure that all such owners sign a copy of that letter.
The lessons are simple. However, the penalty for non-compliance can be severe. At worst, a failure to apply the lessons can result in a sale with no fee. At best, expect vexed legal proceedings and a jamboree for lawyers.
Mark Warwick, Selborne Chambers
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Who did you get your instructions from?
Catching up on paperwork may not be your top priority, but a recent case serves as a warning to estate agents who are less than diligent in this respect.
In Day Morris Associates v Voyce [2003] EWCA Civ 189; [2003] PLSCS 41, the agent was consulted by an estranged wife in respect of a jointly owned home. The agent dealt only with the wife. It sent her a standard letter of engagement setting out its terms. However, although the wife allowed viewings by around 16 prospective purchasers, she neither signed the letter nor verbally accepted the agent’s terms.
One of the viewings resulted in interest from Ms L, but the wife did not accept her subsequent offer. Rather, the wife and husband resolved their financial dispute by way of a court order and the husband took over the sale of the house. He contacted Ms L and agreed a sale price. Ms L purchased the property and the agent sent an invoice to the wife. The wife refused to pay and denied having any contract with the agent. The agent sued, arguing that its terms had been accepted by “conduct”. This contention failed in the county court. The judge did not directly deal with the “acceptance by conduct” point. Instead, he said that the choice of purchaser was entirely that of the husband, and that the wife was therefore exonerated from payment. The agent appealed.
The Court of Appeal had to deal with the “acceptance by conduct” point. It ruled that “a contractual acceptance has to be a final and unqualified expression of assent to the terms of the offer. Conduct will amount to an acceptance only if it is clear that the offeree did the act in question with the intention of accepting the offer”. Although “the case was surrounded with difficulty and uncertainty largely of [the agent’s] making”, the Court of Appeal decided, on balance, that the wife’s acquiescence in the process of marketing had signified her acceptance of the agent’s terms. The agent therefore recovered its commission.
The agent was perhaps fortunate that it could point to a “process of marketing” that had included showing a large number of potential purchasers around the property and distributing written particulars of sale. Whether it would have been as fortunate if Ms L had come onto the scene at an earlier stage is debateable. If no contract had existed, the agent’s only chance of recovering any money would have been to seek a reasonable fee on the basis of quantum meruit (a reasonable sum for services rendered).
The Court of Appeal did not resolve the quantum meruit issue. The quantum meruit argument is fraught with difficulty. Section 18(1) of the Estate Agents Act 1979 applies to any person who “enters into a contract with another… under which the agent will engage in estate agency work…”. What if there is no “contract”? It is thought unlikely that parliament could have intended to allow an agent to be better off without a contract than with one.
What lessons can agents draw from Day Morris?
(1) Check whether you are dealing with all legal owners of a property.
(2) Address your retainer letter to each of these owners.
(3) Ensure that all such owners sign a copy of that letter.
The lessons are simple. However, the penalty for non-compliance can be severe. At worst, a failure to apply the lessons can result in a sale with no fee. At best, expect vexed legal proceedings and a jamboree for lawyers.
Mark Warwick, Selborne Chambers
