COMMISSION CLAUSE IN ESTATE AGENTS’ CONTRACT HELD TO BE UNFAIR

Bairstow Eves London Central Ltd v Smith [2004] EWHC 263 (QB), 20 February 2004

In Bairstow Eves London Central Ltd v Smith [2004] EWHC 263 (QB), 20 February 2004, Mr Justice Gross held that a term in a contract between the claimant estate agents and their clients, the defendants, did fall within the scope of the Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999/2083) and was, consequently, unfair. While regulation 6(2) provides that, in so far as it is in plain intelligible language, the assessment of the fairness of a term shall not relate to the adequacy of the price, Mr Justice Gross affirmed that this provision must be given a ‘restrictive interpretation’ so that a ‘coach and horses’ is not driven through the Regulations. On the facts it was decided that the term which provided for a commission rate of 3% was a default provision which only came into play if the client failed to pay the 1.5% commission within 10 days. This being the case, the term that made provision for a commission rate of 3% fell within the scope of the regulations and was not a clause which regulated the price to be paid for the estate agents’ services.