AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
1950 (3) TMI 25
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....hem on 2nd June, 1943, he purported to conclude a contract for the sale of the property and the communicated the same to the respondent by a letter of even date. The respondent, however, entered into an agreement on 9th June, 1943, with a nominee of the said persons for the sale of the property for Rs. 1,05,000 and eventually executed a conveyance in their favour on 8th December 1943. 3. Thereupon the appellant brought the suit alleging that the contract concluded by him with the purchasers for Rs. 1,10,000 on the 2nd June, 1943, was binding on the respondent and claimed that he was entitled to the payment of Rs. 6,000 as remuneration in accordance with the terms of his employment as he had done all that he was required to do on behalf of the respondent. In the alternative he claimed the same sum as damages for breach of contract. In defence to the suit the respondent pleaded, inter alia, that the appellant had no authority to conclude a binding contract for sale with any one, that the purchasers refused to complete the transaction alleging that they had been induced by the fraudulent misrepresentation of the appellant to agree to a price of Rs. 1,10,000, that the subsequent sal....
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....d by the plaintiff and the defendant, and as that sale, in the view also of the learned Judges, was the "direct result of the plaintiff's negotiations", they held that the appellant was entitled to commission but only on the price mentioned in the sale deed, namely, Rs. 1,05,000 which, they found was the price actually received by the respondent. As to why the respondent accepted a reduced price, Harries C.J., who delivered the judgment of the Court, observed : All that is known is that persons who undoubtedly made a firm offer of Rs. 1,10,000 for this property eventually bought it for Rs. 5,000 less. I strongly suspect that the price was reduced at the defendant's instance but I cannot find it as a fact. In support of their view that the appellant was not entitled to any commission above that payable on a purchase price of Rs. 1,05,000 the learned Judges relied on the decision of the House of Lords in Luxor (Eastbourne) Ltd. v. Cooper [1941] A.C. 108, where it was held that, in a contract to pay commission upon the completion of the transaction which the agent was asked to bring about, there was no room for implying a term that the principal shall not without j....
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....rial Judge as well as by the Appellate Bench, but it was pressed upon us by Mr. Setalvad on behalf of the appellant. We are unable to accept that view. The contract specifies only the price required by the respondent but does not furnish the broker with other terms such as those relating to the payment of the price, the investigation and approval of title, the execution of the conveyance, the parties who are to join in such conveyance, the costs incidental thereto and so on. In fact, the agreement of sale dated the 9th June, 1943, entered into by the respondent with the purchasers contains detailed stipulations on all these and other matters. Mr. Setalvad laid stress on the statement in the commission note that the sale was to be free from encumbrances and that a "good title" would be made out, but this is no more than a general indication of the matter of the bargain proposed and is perfectly consistent with all understanding that further details will be subject to negotiation between the respondent and the purchaser when found. 8. As pointed out by Kekewich J. in Chadburn v. Morre 67 L.T. 257 a house or estate agent is in a different position from a broker at the stock exchang....
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....er or not the commission note imports such an understanding, for a sale was in fact concluded with the purchasers introduced by the appellant who has thus, in any view, earned his commission, both the trial Judge and the Appellate Bench having found that the appellant's efforts were the effective cause of that sale. The only question is whether the commission is payable on the basis of Rs. 1,10,000 for which the appellant brought a firm other from the purchasers, or on the basis of Rs. 1,05,000 which is the price mentioned in the conveyance. 11. As already stated, the Appellate Bench based their decision on the ruling in the Luxor case. The learned Judges reasoned thus : "In that case the principal had refused to sell in circumstances which afforded no reasonable excuse. Nevertheless, the House of Lords, reversing the Court of Appeal, held that no commission was payable. It appears to me that the principle is applicable to this case. Though the agent introduced a purchaser ready and willing to buy for Rs. 1,10,000 the sale for some reason took place at a lower figure. Even if the defendant unreasonably or without just cause refused to conclude the sale at the higher....
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....ated 5th January 1948. By that judgment the High Court varied the judgment and decree of Gentle J. dated 11th June 1945 made in exercise of his original jurisdiction, decreeing the plaintiff's suit for recovery of a sum of Rs. 6,000. 14. The appellant is a broker by profession residing at No. 81/1 Phear Lane, Calcutta, and carries on the business of a house agent. The respondent, Animendra Kissen Mitter, resides in No. 20B, Nilmony Mitter Street, Calcutta. 15. The appellant was employed by the respondent to negotiate the sale of the respondent's premises, No. 27, Amratolla Street, Calcutta, on certain terms and conditions on commission and the question raised by this appeal is whether the appellant is entitled to his commission under the circumstances hereinafter mentioned. 16. The facts are substantially admitted. By a letter dated 5th May, 1943, the appellant was employed by the respondent for arranging a sale of the premises above mentioned. This letter is in the following terms :- "I, Animendra Kissen Mitter of No. 20B, Nilmoni Mitter Street, Calcutta, do hereby authorize you to negotiate the sale of my above property free from all encumbrances at a pr....
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....copy of the letter of Messrs. Kishori Lal Mahawar and Ram Kumar Mahor accepting your offer is enclosed herewith." 20. The letter was received by Mitter on 3rd June 1943, two days before the termination of the plaintiff's authority. The respondent made no reply and kept silent. He did not question the agent's authority in effecting a binding contract of sale with the purchasers. He did not repudiate the transaction nor did he expressly ratify it. It was the plaintiff's case that he had accepted the purchasers' offer after getting express instructions from the respondent. That case, however, was not accepted in the two courts below. 21. On 3rd June, 1943, the solicitor for the purchasers wrote to the solicitor for the agent that as the offer of his client for the purchase of 27, Amratolla Street had already been accepted and acceptance communicated to him, the title deeds should be sent so that a conveyance may be prepared. At his respect inspection of the letter of authority was offered by the plaintiff and a copy of the letter was sent to him by post. On receipt of this copy the purchasers' solicitor assumed a curious attitude. He said that the copy of the....
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....paying it to the broker. It was to the advantage of both of them. 23. On 14th August, 1943, the appellant filed the suit out of which this appeal arises for recovery of Rs. 6,000, brokerage payable under the commission note. He also claimed relief by way of damages in the alternative. The defendant resisted the suit and denied the appellant's claim. Gentle J. who heard the suit, gave judgment for the plaintiff and passed a decree for a sum of Rs. 6,000, with interest and costs in his favour. He held that on a true construction of the commission note the appellant's authority was to find a purchasers, namely, a man ready, able and willing to buy at a price acceptable to the respondent and that the appellant had accomplished this when he introduced to the respondent the purchasers and that he had done all that was required of him. It was held that the appellant had no authority to conclude a contract of sale and no binding contract of sale was made on 2nd and 3rd June, 1943, that the transaction effected nominally in the name of Makkanlal and completed on 8th December, 1943, in favour of Kishorilal Mahawar and Ramkumar Mahor, was effected solely through the intervention of....
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....e respondent did not sell the property for Rs. 1,10,000 but chose to receive instead Rs. 1,05,000, the plaintiff could not be made to suffer. (3) That on the evidence it should have been held that the sale was made for a price of Rs. 1,10,000 and that the amount entered in the sale deed was fictitious. 26. The first thing to see is what the parties have expressed in the commission note and what is the true effect of the language employed in it, read in the light of the material facts. As pointed out by Viscount Simon, Lord Chancellor, in Luxor (Eastbourne), Ltd. v. Cooper [1941] A.C. 108, contracts with commission agents do not follow a single pattern and the primary necessity in each instance is to ascertain with precision what are the express terms of the particular contract under discussion. I have very carefully considered the terms of this contract in the light of the material circumstances and with great respect to the Judges who decided this case in the High Court, I am of the opinion that the authority given by the principal to the agent authorized him to enter into a binding contract of sale on his behalf. It was not a mere authority authorizing him to find a purchaser ....
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....and no buyer can be said to be ensured till he is bound by his offer and that cannot happen unless it stands accepted. The agent could only secure a buyer in the strict sense of the term if he had authority to enter into a binding contract. The word "buyer" when used in a strict sense also means "a person who has actually made the purchase". The authority given to an agent to secure a buyer therefore gives him authority to enter into a binding contract of sale with him. Without such an authority it was not possible to secure a buyer. I am further supported in this view by the language employed in the document in respect of the payment of the commission. When the price secured was Rs. 1,10,000, the broker was entitled to 25 per cent of the excess. It is difficult to think of an excess in relation to price in a stipulation for commission unless the agent has been given an authority to make a contract of sale. If the scope of the authority is only to introduce a customer ready, able and willing to buy the property with an option to the principal to accept or to refuse the offer, then it would have been drawn up in a different language. 27. The subsequent conduct of both the parties....
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....count books. After a great deal of prevarication he was made to accept the document of 5th May, 1943, and its terms. He admitted that on 3rd June he had a conversation with the purchasers and was informed by them that they had entered into a bargain with the broker and that the broker had deceived them about the commission and therefore they would not but the house. He admitted that he got the letter sent by the plaintiff, but gave no explanation as to why he sent no reply to that letter. With great difficulty he was made to accept his signature on the postal acknowledgment about the receipt of the letter sent by the broker to him informing him of the concluded bargain made with the purchasers, and he had to admit that he got that letter from the broker. He also admitted that he took no objection to the letter written by the broker before Kishoribabu had told him the story about the commission of two per cent. In further cross-examination he admitted that what was stated by the broker in the letter of the 2nd June was correct. The whole evidence given by the defendant consists of evasive statements and his ultimate resort was in lapses of memory. It is quite clear from his depositi....
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....ufficient authority to the agent for that purpose, I cannot help expressing an opinion that such an authority to an agent on the part of a vendor would be highly imprudent as the purchaser would then he entitled to require, on completion, attested copies of all documents of title, and the expense of them would swallow up, to a great extent, the purchase money. This estate agent must have known that if this property had been offered for sale by public auction there would have been conditions to guard the vendor against being subject to certain expenses, and to prevent the contract becoming abortive by reason of a purchaser requiring a strictly marketable title. Could he suppose that he was invested with authority to sign a contract without considering what it should contain as regards title ? As an intelligent and well informed person, he could not suppose that he was properly discharging his duty to his principal when he signed the contract which he signed; such a contract was not one within the scope of his authority to sign." 32. The case therefore stood decided on the construction of the document. It was remarked that in those circumstances it was not necessary to decide what....
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....ntiff called on Messrs. Pinder, Simpson and Newman and two letters were exchanged between them, which were letters of offer and acceptance for the twenty-nine houses at Grays. The offer and acceptance were forwarded by the defendant to the estate agents. The defendant on receiving this offer wrote a letter saving inter alia :- "I think you were, as you usually are, a little premature in actually entering into what might be a binding contract. It is always best to have an offer and acceptance subject to a formal contract being entered into...". 36. To this Newman replied :- "The offer for the above was accepted under your definite instructions and is a very good get out for you." 37. Kekewich J., who decided this case, gave the following judgment :- "Having heard Mr. Newman, who was called without the plaintiff knowing what he was going to say, and having read the correspondence, I have little doubt that I have the real transaction - which is a mere transaction between principal and agent - before me. It might be that a different colour would be put upon the matter by the cross-examination of Mr. Moore, but this was not done, and he is entitled to ha....
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.... the parties is materially different. The observations made by the learned Judge must be taken to be limited to the facts found by him. The expressions "find a purchaser", "procure a purchaser", "negotiate a sale" standing by themselves may not be sufficient to confer authority on the agent to enter into a binding contract on behalf of the principal; but as I have indicated above, the words in the present case are such as by necessary implication conferred authority on the agent for making a binding contract. 39. The next case is Durga Charan Mitra v. Rajendra Narain Sinha 36 C.L.J. 467, a Bench decision of the Calcutta High Court. The document considered in that case bears considerable resemblance with the document in the present case. 40. It was in these terms :- "I hereby authorize you to negotiate the sale of the lands at Tolligunge I have recently purchased from Messrs. Martin and Co. If you can secure a purchaser to purchase the same at the gross value of Rs. 16,000, I shall pay you Rs. 200 as your remuneration. If you be able to raise the price to any amount above Rs. 16,000, you will be entitled to the excess amount fully and I shall be bound to mention the w....
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....in that case decided, as I understand it, was that if you go to an estate agent, and tell him you have a property to sell, and that you want a purchaser, and you tell him what you have made up your mind shall be the price, and to a certain extent what shall be the conditions, and you instruct him to try and find a purchaser, that is not sufficient, under those circumstances, to authorize the agent to make a contract without any conditions whatever with regard to the title. 43. I have been unable to find any case in which it has been held that instructions given by A.B. to sell for him his house, and an agreement to pay so much on the purchase prices accepted, are not an authority to make a binding contract, including an authority to sign an agreement. 44. In my opinion, on the terms of the instrument in this case and in view of the relevant evidence the correct conclusion to draw is that the agent had authority to enter into a binding contract with the purchaser and that he did and is therefore entitled to succeed in the case. Reference in this connection may be made to Wragg v. Lovett (1948] 2 A.E.R. 969, where Lord Greene, M.R., put the proposition in these words :- ....
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....correct one, the question arises whether in that event the decision under appeal can be maintained. I am inclined to the opinion that even on the construction placed by the trial Judge on the commission note the view taken by him was the correct one and the court of appeal arrived at a wrong conclusion by giving too much importance to certain obiter observations of Lord Russell of Killowen and Lord Romer in Luxor (Eastbourne) Ltd. v. Cooper [1941] A.C. 108. In this very case it was pointed out by Viscount Simon L.C. that there were at least three different classes of cases in which the question of a right to commission could arise. He states the first of them in these terms :- "There is the class in which the agent is promised a commission by his principal if he succeeds in introducing to his principal a person who makes an adequate offer, usually an offer of not less than the stipulated amount. If that is all that is needed in order to earn his reward, it is obvious that he is entitled to be paid when this has been done, whether this principal accepts the offer and carries through the bargain or not. No implied term is needed to secure this result." 48. In my opinion, ....
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.... buy the property for Rs. 1,10,000. 53. As I have indicated above, if the word "buyer" is to be construed in a strict sense, then it must be held that the broker had authority to secure a buyer of that type and he could only do so by making a binding contract with him. On the other hand, if the word is taken to mean a potential buyer, such a buyer having been secured, the agent was entitled to the commission that had been promised to him. 54. It is now convenient to consider the case of Luxor (Eastbourne) Ltd. v. Cooper [1941] A.C. 108 in some detail because certain observations made by Lord Russell of Killowen and Lord Romer are the basis of the decision of the learned Chief Justice. In this case no commission note was addressed to the broker and the contract was not contained in any document. Evidence in support of the commission agreement was oral and its terms had to be deduced from that evidence. Viscount Simon L.C., out of the materials from which express contract had to be pieced together, reached the result that the bargain was this : "If a party introduced by the respondent should buy the cinemas for at least Pounds 1,85,000, each of the two appellants would....
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....h implied term. Implied terms, as we all know, can only be justified under the compulsion of some necessity. No such compulsion or necessity exists in the case under consideration. The agent is promised a commission if he introduces a purchaser at a specified or minimum price. The owner is desirous of selling. The chances are largely in favour of the deal going through, if a purchaser is introduced. The agent takes the risk in the hope of a substantial remuneration for comparatively small exertion. In the case of the plaintiff his contract was made on September 23, 1935; his client's offer was made on October 2, 1935. A sum of Pounds 10,000 (the equivalent of the remuneration of a year's work by a Lord Chancellor) for work done within a period of eight or nine days is no mean reward, and is one well worth a risk. There is no lack of business efficacy in such a contract, even though the principal is free to refuse to sell to the agent's client. The position will no doubt be different if the matter has proceeded to the stage of a binding contract having been made between the principal and the agent's client. In that case it can be said with truth that a '....
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....not contend, and no one could successfully contend, that the obligation of the principal to enter into a contract is an unconditional one." 59. The learned Chief Justice relying on the last part of the above quotation reached the conclusion that in the present case as the duty of the agent was to secure a purchaser, it could not be held that the purchaser had been secured till the contract of sale was concluded by the vendor with him and that the actual sale having been concluded for a sum of Rs. 1,05,000, the plaintiff could only get his remuneration on the basis of the price for which the sale was made and not on the basis of the offer the plaintiff had secured. It seems to me that when Lord Romer was laying down that a purchaser in such contracts means at least a person who enters into a binding contract to purchase, he had in mind the contract with which he was dealing in that case. I am free to think that Lord Romer had not in mind commission notes wherein the word "buyer" or "purchaser" had been employed in a loose sense. 60. In Jones v. Lowe [1945] 1 K.B. 73, wherein the instrument was in these terms - "In the event of my introducing a purchaser, I shall look ....