Wickremasinghe and William.
1944Present: Howard C.J. and Wijeyewardene J.WICKREMASINGHB, Appellant, and WILLIAM, Despondent.
70—D. C. Colombo, 14,645.
Broker—Agreement to sell a land—Right to commission—Completion of sale.
Where the plaintifE, a broker, entered into an agreement with thedefendant in the form of a letter signed by the defendant in the followingterms: —
“I do hereby authorise you to sell my property—for the sum of Rupeestwenty thousand five hundred. I agree to pay you by way of remunera-tion rupees five hundred. This holds good for two weeks. ”
the plaintiff found a buyer, who was willing to pay the stipulated price,but the defendant when called upon, refused to execute the transfer.
Held,that the right’ tocommission was dependentuponthe
completion of the sale.
A PPEAL from a judgment of the District Judge of Colombo.
N. Nadarajah, K.C. (with him E. B. Wiokremanayalce), for thedefendant, appellant.
J. M. J ay am arm e, for the plaintiff, respondent.
Cur. adv. vult.
HOWABD C.J.— Wickremasinghe and William.
September 27, 1944. Howaed C.J.—
This is an appeal from an order of the Additional District Judge ofColombo ordering the defendant to pay to the plaintiff the sum of Rs. 500with costs. The plaintiff claimed this sum by virtue of an agreementdated December 22, 1942 (P 1). This agreement in the form of a lettersigned by the defendant was worded as follows: —
“I do hereby authorise you to sell my property bearing assessmentNo. 44 at Kotfca road, Borella, for the sum of Rupees Twenty thousand♦five hundred (Rs. 20,500).
I tagree to pay you by way of remuneration Rupees five hundred(Rs. 500). This holds good for 2 weeks.”
The plaintiff found a buyer who was willing tc pay the stipulated price,but the defendant when called upon, refused to execute the transfer.In finding in favour of the plaintiff the learned Judge distinguished thepresent case from Perera v. Boteju1. In the latter case the contractbetween a principal and his agent was expressed in the following terms:“ I have authorised B …. to negotiate the sale of my house
and property for the sum of Rs. 11,500 only. 1 further promise toremunerate Bwith 2 per cent, on the amount realized.”
The Full Bench held that the right to the commission was dependentnot on the agent finding a purchaser ready and able to purchase at thoprice but on the completion of the sale. In his judgment Soertsz J.referred to and followed the rule enunciated by Viscount Simon in LuxorLtd. v. Cooper2. This rule, also cited by the learned Judge in this case,is as follows : —
’* It may be useful to point out that contracts under which an agentmay be occupied in endeavouring to dispose of the property of aprincipal fall into several obvious classes. There is the class in whichthe agent is promised a commission by his principal if he succeeds inintroducing to his principal a person who makes an adequate offier,usually an offer of not less than the stipulated amount. If that is allthat is needed in order to earn his reward, it is obvious that he isentitled to be paid when this has been done whether his principalaccepts the offer and carries through the bargain or not. No impliedterm is needed to secure this result. There is another class of easein which the property is put into the hands of the agent to dispose offor-the owner, and the agent accepts the employment and, it may be,expends money and time in endeavouring to carry it out. Such a formof contract may well imply the term that the principal will not withdrawthe authority he has given after the agent has incurred substantialoutlay, or, at any rate, after he has succeeded in finding a possiblepurchaser. Each case turns on its own facts and the phrase finding apurchaser is itself not without ambiguity. Inchbald’s case 3 might,I think, be regarded as falling within this second class. But there is ftthird class of ease (to which the present instance belongs) where, by tbo
1 44 N. L. R. 313.
17 C. B. (N. S. ) 733.
C1941) A. C. 108.
HOWARD C.J.—Wickremasinghe and William.
express language of the contract, the agent is promised his commissiononly upon completion of the transaction which he is endeavouring tobring about between the offeror and his principal. As X have alreadysaid, there seems to me to be no room for the suggested implied termin such a ease. The agent is promised a reward in return for an event,and the event has not happened. He runs the risk of disappointment,but if he is not willing to run. the risk he should introduce into theexpress terms of the contract the clause which protects him.”
The learned Judge then proceeded to hold that the express language ,ofthe contract does not contemplate the conmpletion of the sale. Thequestion arises as to whether this interpretation of P 1 is correct* P 1is an authorisation to sell the property for a certain sum. The sale is notcomplete until both vendor and purchaser have agreed. It seems to methat Jihe plaintiff’s right to commission under the terms of P 1 depends on aparticular event, namely, the completion of the sale. The claim tocommission becoming due when the sale is not completed involves thecontention that the principal by virtue of the contract has surrenderedthe freedom to dispose of or retain his own property which he unquestion-ably enjoys vis-a-vis the other negotiating party. The commissionagreement is, however, subordinate to the hoped for principal agreementfor sale. The only interpretation that can be given to P 1 is that thecommission, is payable on sale, that is to say on completion of the sale-This event has not happened. The further question arises as to whetherthe law permits the introduction of an implied term making the com-mission payable on the plaintiff finding a person ready to purchase theproperty at the defendant’s price.
Their Lordships in Luxor Ltd. v. Cooper (supra) deal in a comprehensivemanner with the power of the Court to imply particular terms in contracts.In this connection Lord Wright at page 137 stated that it is agreed ondll sides that the presumption is against the adding to contracts of termswhich the parties have not expressed. The general presumption is thatthe parties have expressed every material term which they intendedshould govern their agreement, whether oral, or in writing. But it is wellrecognized that there may be cases where obviously some term must beimplied if the intention of the parties is not to be defeated, some term ofwhich it can be predicted that “ it goes without saying ”, some term notexpressed but necessary to give to the transaction such business efficiencyas the parties must have intended. This does not mean that the Courtcan embark on a reconstruction of the agreement on equitable principles,or on a view of what the parties should, in the opinion of the Court,reasonably have contemplated. The implication must arise inevitablyto give effect to the intention of the parties. I do not think there is anyroom for the introduction into the contract of an implied agreementmaking the commission payable on the plaintiff finding a person ready topurchase the property at the defendant’s price. To hold that such aterm must be implied would, to use the words of Lord Wright, mean thatthe Court was embarking on a reconstruction of the agreement on equitableprinciples, or on a view of what the parties should, in the opinion of theCourt, reasonably have contemplated. It cannot be argued that the
HOWARD C.J.—Cooray and Perera.
implication arises inevitably to give effect to the intention of the parties.To use the words of Viscount Simon, if the plaintiff was not willing to runthe risk of disappointment he should have introduced into the expressterms of the contract the clause which protects him.
In these circumstances the appeal must be allowed and judgmententered for the defendant with costs in this Court and the Court below.
Wijeyewardene J.—I agree.
WICKREMASINGHE, Appellant, and WILLIAM, Respondent