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Court Awards Brokerage Firm $50,000.00 Commissions Despite Not Having An Executed Brokerage Services Agreement from the Buyer

In a recent case, the Buyer of a business along with its real Property refused to pay the Broker for finding and presenting the Buyer with the sale of the Property.

The Property was not listed on the MLS.  The Broker found the Property which is considered to be an off-market Property.  Before providing the Property information to the Buyer, the Broker required the Buyer to sign a confidentiality agreement, which the Buyer executed.  As the deal progressed, the Broker sent the Buyer a Brokerage Services Agreement.  However, while the Buyer acknowledged the Brokerage Services Agreement and that it would be reviewed, the Buyer never signed the Brokerage Services Agreement.

Thereafter, the Buyer continued to utilize the Broker’s services for the negotiation of the deal.  Finally, the Buyer actually purchased the Property and business, but refused to pay the Broker its commission.

The Court held that the Buyer only learned of the Prpoerty’s sale because of the Broker’s actions.  In other words, the Broker was the procuring cause of the consumated transaction.  The Court reasoned that the Broker should not be deprived of its commission merely because the Buyer completed the sale without the Broker’s direct involvement, since the Broker introduced the Parties of the sale and the Buyer admittedly would have never known about the existence of the Property without the Broker’s efforts.

Finally, the Court reasoned that since the Buyer continued to utilize the Broker’s services after receiving the written Brokerage Services Agreement, the Buyer should compensate the Broker for services rendered.

As to the value fo the Broker’s services, the Court stated that commissions can be based upon the sale’s percentage or how much the Buyer’s benefited and must provide a reasonable basis.  The evidence of a reasonable basis could be provided by expert testimonty, past practices or the value paid to other brokers in the transaction.


When a person sends you an agreement/purchase order/contract, in writing and the parties continue to interact in furtherance of the transaction, then a written response is required.  Otherwise, the Court will determine that you agreed to the terms of the document.

Additionally, when information is your product, then a non-disclosure/confidentiality agreement should be used.

For further information on the use of and drafting of a confidentiality agreement and enforcing these agreements and Brokerage Services Agreement, then please contact Corey B. Stern at [email protected]