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Paper 1 · Lesson 8 — Law of Agency and Negligence

Commission and parties

Entitlement to commission, who may sue, and the effect of adoption of an agent's acts.

2 questionsAnswers & explanations includedFree — no sign-up

Question 1

Agent A advertises a new development at his own cost across several portals. A buyer responds to that advertisement, views a unit with Agent A on two occasions, and is given the floor plans, the finishes schedule and the indicative pricing. He then goes quiet for some weeks. He returns to the development one Saturday on his own, walks into the showflat, is received by Agent B, and completes the purchase of the same unit through her; her involvement consists of taking him through the paperwork and witnessing the signing. Both agents now claim the commission, and the developer asks to be told which of them to pay.

Which statement is correct?

  1. A. B is entitled, having handled the transaction through to completion.
  2. B. A may claim; but for his introduction the sale would not have happened.
  3. C. Neither is entitled, the buyer having returned of his own accord.
  4. D. The commission is divided equally between them as a matter of law.
Show the answer and full explanation

Answer: B

The rule. Commission follows the effective cause of the sale. An agent whose introduction set the chain in motion may claim even though another agent completed the paperwork.

Why B is correct. But for Agent A's advertisement and viewing, the buyer would not have known of the unit.

The other options.

  • A rewards whoever closed.
  • C treats the buyer's independent return as breaking the chain, which is exactly the situation the doctrine addresses.
  • D invents an automatic split.

Exam note. Ask what actually brought this buyer to this property.

Commission follows the effective cause of the sale →

Question 2

Regarding her husband's shareholding in the buying company, which statement most appropriately describes her position?

  1. A. No issue arises, the shareholding being her husband's rather than her own.
  2. B. No issue arises, thirty per cent being a minority holding.
  3. C. She should have disclosed the connection before he considered it.
  4. D. No issue arises provided the price obtained was within the range of market value.
Show the answer and full explanation

Answer: C

The rule. A connection between the agent and the other party must be disclosed before the client acts. It makes no difference that the interest is a family member's rather than the agent's own, nor that the holding is a minority one.

Why C is correct. The shareholding should have been disclosed before Mr Tan considered the offer.

The other options.

  • A relies on the interest being her husband's
  • B on it being a minority
  • D on the price being within range. Each answers a different question from the one the duty asks.

Exam note. The duty is to disclose the conflict, not to demonstrate that it caused harm.

A connection between the agent and the other party must be disclosed before the client acts →

Practise it under exam conditions

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