On the 8th of August 2018, Justice Parker of the Supreme Court, made a statement that an agency agreement may not be enforceable where the agreement uses the words, “as per contract.” Justice Parker asked the question, why the parties should enforce an agency agreement where the contract is not existence and it is not attached to the agency agreement.
For fifteen years, Leverage has been teaching the court participants to not use the words, “as per contract”. Agents have constantly said it is not, “practical” to do anything else.
Justice Parker’s words clearly show that it is “impractical” to do anything else.
Justice Parker had two problems with the words, “as per contract”:
- He was concerned that the contract was not yet in existence. His actual words were, “how can I enforce a contract (meaning the Agency Agreement) where the reference doesn’t exist?”; and
- He was concerned that the contract referred to in the agency agreement was not attached to the agency agreement.
Considering the contract isn’t in existence at the time that an agency agreement is executed, both things are impossible. In fact, it is “impractical” to even consider Justice Parker’s decision.
Well, what do you do?
- Where something is to be negotiated by the parties, you need to use the words, “to be negotiated by the parties.” For example, where it says, “any special conditions”, you could use this term. Do not use nil because special conditions will always operate as part of the contract.
- Where it asks you questions regarding, “easements, covenants etc” you use the words, “unknown to agent.” This is valid because you do not have a contract in existence.
If an agent wants to protect their commission, avoid the words, “as per contract.” If you ignore these words, you will hear the following words from a court, “the commission is not payable as per contract.”
This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.
To get in touch with Bailey, please email email@example.com