MANDATES AND CLAIMING AGENTS COMMISSION

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A.  Compliance with Section 26 of the Estate Agents Act 112 of 1976

The valid holder of a fidelity fund certificate and insurance (Ronstan Investments (Pty) Ltd and No v Littlewood 2001 (3) SA555)

B.  A mandate to find a purchaser

  • (Michael v Vermeulen and No 1971 (1) SA 442) – the mere fact that the owner indicated that he wanted to sell his property and provided certain information to the agent, does not constitute a mandate.
  • (Bosch v Flower Box (Pty) Ltd 1971 (4) SA 640) – an implied mandate can only be relied on if the court can establish that there was consensus between the seller and the agent.
  • (Bird v Sumerville and No 1961 (3) SA 194) – a mandate does not entitle the agent to conclude a contract or substitute parties or to receive monies on his behalf.

C.  Due performance of his mandate – (what due performance is, depends on the terms of the mandate)

  • (Phillips v Aida Real Estate (Pty) Ltd (3) SA 198) – Payment of liquidated damages to the agent if offeror withdraws before acceptance –  no intention of offeror to contract with the agent.
  • In the absence of a clear mandate it would mean :

Introduction of the purchaser to the seller

(D.C. Wylde & Co v Sparg 1977 (2) SA 75) to inform a prospective buyer that you have a 

mandate is no introduction

That the purchaser was, at signature of the agreement willing and able to purchase

(Beckwith v Foundation Investments Co 1961 (4) SA 510 (a))

That a valid contract of sale was concluded

(Brayshaw v Schoeman 1960 (1) SA 625 (A)) not only finding a purchaser

That the introduction was the effective cause of the contract

  • (Basil Elk Estates (Pty) Ltd v Curzon 1990 (2) SA I (T)) – depending on the time span between introduction and purchase – 9 months
  • (Wynland Properties CC v Potgieter and No 1999 (4) SA 1265) – intervention by a third party and time span is important.
  • (Knight Frank SA Ltd v Nach Investments (Pty) Ltd 1999 (3) SA 891 (W)) – effective cause although the purchaser was not introduced to the property by the agent.

In one of the benchmark cases of which judgement was handed down in the High Court of South Africa Free State Division Bloemfontein being Warren Farms CC vs Andre Micro Ferreira and Another the Court had to decide as to whether a proper introduction based on a mandate was done by the relevant estate agent and whether such introduction can be viewed as the effective cause of the transaction being concluded even though such transaction had taken place after the expiry of the estate agent’s sole mandate.

Warren Farms CC being a registered estate agent claimed the amount of R160 740-00 estate agents commission alleging that he (Mr Garth) was the effective cause of the sale of the farm Treur Fontein between Mr Ferreira and the Department of Rural Development and Land Reform.

Mr Ferreira extended a sole mandate to the estate agent to market his farm to the Department and as a direct result of the introduction the aforesaid immovable property was purchased at a price of R2 350 000-00 exclusive of VAT.  According to the estate agent he performed in terms of his mandate and was the effective cause of such sale and was thus entitled to estate agents commission.

Although Mr Ferreira admitted that the initial introduction of the property was done by the estate agent, he denied that the estate agent was the effective cause of the sale as he submitted that the estate agent’s sole mandate had expired after six months and prior to conclusion of the transaction.

The estate agent prepared all documents for presentation and included such information on his website and such information was sent to prospective buyers as well as Mr Vincent Paul of the Department of Rural Development.  The estate agent took Mr Paul to the farm who stated that he was impressed with the farm and that he would discuss the acquisition of the farm with the Committee.

After the aforementioned introduction the parties contracted with one another privately, excluding the estate agent and irrespective of numerous attempts the estate agent was ignored and registration of the property subsequently took place in the name of the Department.

The Court found that the usual and customary terms of a mandate are :  that in the event of the estate agent introducing to his principal, the owner of the property, a purchaser for the property who is willing and able to purchase it and the transaction is successful and finalised, such as in this instance, the agent is the effective cause of the sale.

The Court further found that the estate agent’s wisdom and business acumen brought the seller and the purchaser together and it was such an introduction that was the effective cause of the sale.  The Court was further satisfied that the estate agent established on a balance of probabilities that he introduced the Department to the farm and the Department which was the causative factor in the conclusion of the sale and ordered payment of the estate agents commission to the estate agent.

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