EFFECTIVE CAUSE AND AGENT'S RIGHT TO COMMISSION

Abstract

The real estate market is a place where the agent, the client and the third party will meet and negotiate for a sale or lease of a property Over the past few years, the problem of agents not being paid their commission has increased This may be due to the client's default or undercutting by other agents and hence, lead to the agent's abortive work Therefore, there is a need to examine whether the agents in Singapore are protected against this problem by legislation "Effective Cause" seems to be an important criteria that all agents must meet in order to succeed in claiming commission. This seems to be a fair test as no commission will be payable to any agent if he has not effected any sale. However, other factors have to be considered as well. This dissertation aims to compare the existing local legislation and England's legislation on the agent's right to commission. The study shows that local legislation, Auctioneers' Licences Act (Chapter 16, 1985 Edition) does not provide any regulation to protect the agents when such a problem arises. However, the England's Estate Agent's Act 1979, with its 1991 Regulations (Provision of Information) provides the basis upon which the agents can claim commission. In addition, it is observed that the courts in both countries rely upon the case law and guidelines set out in previous decisions to decide on who will get the commission The study also shows that many agency firms in Singapore are aware of this rising problem and efforts are being made to protect their agents against it. Sole agency practices have been gaining popularity over these few years. The reason for this trend is that agents would rather secure their business on a sole agency basis rather than on an open-listing basis as abortive work can be costly and frustrating. Thus, in order to make sole agency practices in Singapore a success, compulsory legislation restricting one agent to one client may be passed. The study shows that the majority of firms surveyed welcome the idea