Effective cause – Office for sale in Singapore
It was highlighted in Deans Property Pte Ltd v Land Estates Apartments Pte Ltd [1995] Court case that: “It is clear that the relationship between an agent and a principal is a contractual one with any entitlement to commission being governed by the terms of that contract. However, an agency relationship is sometimes established in a situation where there has been little or no express discussion of contractual terms. The relationship between a vendor and a real estate agent is often of such a character. In such a case, the agent’s entitlement to any commission for the sale of property is dependant on his being the ‘effective cause’ of the sale; this being an implied term of the agency contract.” Office for sale in Singapore.
In order to be the effective cause of a transaction, the agent must be the party that is responsible for bringing about the transaction for which a fee has been agreed; in other words, that transaction would not have occurred without the agent’s efforts.
By introducing the buyer to the seller does not mean that the agent is the effective cause of the sale. In the Court of Appeal of Emporium Holdings (Singapore) Pte Ltd v Knight Frank Cheong Hock Chye & Baillieu (Property Consultants) Pte Ltd [1994] it was pointed out in paragraph 24 of the judgment: “Although the fact that the agent had introduced the person who became the ultimate purchaser is a factor, and a strong factor at that, to take into account in deciding if the agent was the effective cause of the sale it need not by itself be conclusive.”
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