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Doing Deals over the Phone? Make Sure You Confirm in Writing!

Flat96Doing deals over the phone is a hazardous business and agreements should always be confirmed formally in writing, preferably by a lawyer. In one case that strikingly proved the point, an estate agent sacrificed a substantial commission due to his failure to reach a binding contract with the vendor.

The vendor of eight flats had a phone conversation with the agent in which the latter mentioned that his standard commission was 2 per cent, plus VAT. However, he neither identified the sum to which that commission would be applied nor the circumstances in which it would become payable.

The agent swiftly found a buyer for the flats and did not send a copy of his standard terms and conditions to the vendor until after the deal was done. He launched proceedings against the vendor after the latter refused to pay his commission. In upholding his claim, a judge found that there was an enforceable contract between them. He did so by filling the gaps in what was said during the phone call with implied terms.

In ruling on the vendor’s challenge to that decision, the Court accepted that, during the phone call, it had been both parties’ intention to agree then and there that the agent would act for the vendor for reward. However, in allowing the appeal, the Court found that the words actually spoken did not amount to a completed agreement capable of constituting a binding contract.