In Savills v Blacker and Sidemanor ltd the Court of Appeal held that an individual in control of the company and the company itself were both liable for the commission due on the sale of a property.
The property was an estate comprising of a golf course and cottage. The company, Sidemanor Ltd., owned most the estate and Mr Blacker the cottage. Savills were instructed as joint agents with sole selling rights for all the property. That is both the Golf course and the cottage. Savills paperwork was signed by Mr Blacker confirming his, “… instructions to proceed with the sale and marketing… in accordance with this report and the attached terms of business“. When the property was sold, Mr Blacker and Sidemanor Ltd. refused to pay the commission on 2 grounds.
The 2 grounds were (1) the construction of the agreement; (2) whether Mr Blacker had contracted only as Sidemanor Ltd.’s agent and had no personal liability to pay any commission due.
This post will only address ground 2 as this brings up an issue which has been raised by lettings agents.
Whether an agent of one of the contracting parties is to be treated as having contracted personally or not is a question of construction in each written contract. Generally, where an agent has signed without any statement that they are doing so as an agent, then personal liability is likely to be found. Therefore, in this case had Mr Blacker added words such as “as agent” when signing, any personal liability would have been excluded. He was therefore held to be contracted because he did not do so, and accordingly personally liable.
When reaching its decision, the court also looked at the whole agreement and the circumstances of the parties’ interaction. The document that Mr Blacker signed did not clearly identify who the client was, and as stated above Mr Blacker signed without qualification. Savills clearly knew that their instructions related to the property and that while Sidemanor Ltd. owned most of the property and could give instructions in respect of the sale, Mr Blacker was the sole owner of the cottage. The agreement clearly contemplated that commission would be payable by the seller, and the absence of any clear identification of the seller in the signed papers meant that the court had to look at the whole contract and relevant circumstances. Consequently, Mr Blacker’s failure to expressly exclude personal liability for the commission when signing meant that he would be jointly and severally liable with Sidemanor Ltd. because they were the sellers of all the property in this transaction.
If Mr Blacker had successfully argued that he was not personally liable for the commission Savills may not have been able to seek the commission due on the sale of the cottage. It is for this reason that we always strongly recommend that when asking someone to sign terms of business or even a tenancy agreement that you ensure that it is the correct individual or company that signs to ensure the satisfaction of any money due. In addition, it is important that where agents are contracting on behalf of their clients, with suppliers for example, they do so clearly as the agent of the landlord and do not allow any impression to be created that they are assuming any liability themselves.