February 18, 2019

The appellant, Mr Devani, an estate agent, claimed that commission became payable to him by the respondent, Mr Wells, the vendor of a number flats, on the completion of the sale of the flats to a purchaser Mr Devani had introduced to Mr Wells.

Mr Wells completed the development in 2007. By the beginning of 2008 seven of the flats were still on the market. In January 2008 a neighbour of Mr Wells, Mr Nicholson, sent an email to Mr Devani, who was trading as an estate agent, informing him of the unsold flats. Later that day Mr Devani made a telephone call to Mr Wells. In evidence, Mr Devani said that he told Mr Wells that he was an estate agent and that his commission terms would be 2% plus VAT. Mr Wells maintained that Mr Devani made no mention of any commission. Mr Devani contacted Newlon Housing Trust who agreed to purchase the remaining flats for £2.1 million. The transaction proceeded to completion and Mr Devani claimed his commission. Mr Wells refused to pay so Mr Devani issued proceedings.

The matter reached the Supreme Court, which had to decide (amongst other things) whether the agreement was complete and enforceable despite there being no express identification of the event which would trigger the obligation to pay the commission.

The Supreme Court unanimously allowed Mr Devani’s appeal.

Lord Kitchin, giving the lead judgment said that, when assessing whether there was a binding contract, the question is whether, objectively assessed, the parties by their words and their conduct intended to create a legally binding relationship. It might be that the words and conduct relied upon are so vague that the court is unable to identify the terms on which the parties had agreement, but the courts are reluctant to find that an agreement is too vague or uncertain to be enforced where it is clear that the parties had the intention of being contractually bound and had acted on their agreement.

In this case, Lord Kitchin said that it would naturally be understood that payment would become due on completion and made from the proceeds of sale. In short, Mr Devani and Mr Wells had agreed that if Mr Devani found a purchaser for the flats, which he did, he would be paid his commission from the proceeds of sale.

It was therefore unnecessary for the judge to imply any term into the agreement. However, had it been necessary, there would be no hesitation in holding that it was an implied term of the agreement that payment would fall due on completion of the purchase of the property by a person whom Mr Devani had introduced. The obligation to make payment of the commission on completion was required to give the agreement business efficacy and did not go beyond what was necessary for that purpose.

Lord Kitchin recognised that an agreement might be so deficient that nothing can be done to render it enforceable, but he did not accept that there is any general rule that it is not possible to imply a term into an agreement to render it sufficiently certain or complete to constitute a binding contract. Indeed, it is possible to imply something that is “so obvious that it goes without saying” into anything, including something the law regarded as no more than an offer. If the offer is then accepted, the contract would be made on the terms of the words used and what those words implied. Further, where the parties intend to be bound and to create legal relations, it might be permissible to imply a term to give the contract such business efficacy as the parties must have intended. (Wells (Respondent) v Devani (Appellant) [2019] UKSC 4 (13 February 2019) — to read the judgment in full, click here).