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Discounted commission rates may seem like a good incentive to encourage early payment, but such discounts may be considered unfair
Residential estate agents often find it difficult to extract payment for their services. Past attempts to get around the problem of the reluctant payer, eg by attempting to have the vendor's solicitor hold the purchase price on trust (WA Ellis Services Ltd\ Wood [1993] 2 EGLR 43), have proved relatively unsuccessful. It seems that, even in a fairly clear-cut case, recourse to the county court is often the only way to secure payment.
Taking clients to court is an expensive, lengthy process, so it is always worth trying to find some other method to persuade them to pay. One such attempt has recently engaged the attention of a High Court judge.
Dual-rate commission
The case of Bairstow Eves London Central Ltdv Smith [2004] EWHC 263 (QB) began in March 2002, when the defendants put their flat in the hands of the claimant agent, signing a copy of the agent's standard form of agreement. This stated that the claimant was to be retained on a sole agency basis for a minimum of eight weeks but, unusually, provided that commission would be assessed on one of two alternative bases: first, the "Standard Commission Rate", which formed part of the printed terms of business and was defined as 3% of the final sale price, plus VAT; or, second, the "Early Payment Discounted Commission Rate", which, as provided by a handwritten insertion in the...