It has always been common for some businesses, such as estate agents or commercial sales agents, to make their earnings from commission. With the rise of the service economy and internet based businesses like Deliveroo, payment through commission is becoming increasingly popular.
However, the use of a commission based business model can give rise to disputes as to when commission is actually due. A recent case in the Court of Appeal debated this exact issue.
In that case, an estate agent agreed to assist with introducing a buyer for a block of flats. He informed his client how the amount of his commission was calculated, but crucially did not confirm the events which would trigger a liability for payment of that commission. The property was sold and the agent tried to claim payment of commission, but the agent’s client argued it was not due. The court found that the absence of essential information about when commission was due, meant that no valid contract had been formed and the agent’s client was not liable to pay any commission.
This case serves as a reminder to all businesses seeking payment for their services by commission to make it explicitly clear in their agreement or terms and conditions when that commission will be due. The court will not be willing to assist parties by implying missing terms into a contract.
Likewise, customers do not want to find themselves inadvertently liable for commission and need to be aware of the fact that the trigger for these payments can sometimes be a very low threshold. If payment is refused then there is a risk that the company seeking the commission may pursue a claim through the courts, which can be expensive and time consuming to resolve.
If you are concerned about a dispute regarding commission payments and you would like to further discuss any of the information detailed above, please contact our dispute resolution team on 01322 623700.