14 March 1950
Supreme Court


Case number: Appeal (civil) 44 of 1949






DATE OF JUDGMENT: 14/03/1950


CITATION:  1950 AIR   15            1950 SCR   30  CITATOR INFO :  F          1975 SC  32  (19)  E          1980 SC  17  (36)  E          1990 SC1833  (17)

ACT:    Contract Agency Estate  broker--Authority to negotiate a sale’  and’secure  purchaser ’--Whether empowers  broker  to conclude contract--Construction of contract--Broker  finding ready  and willing to buy for price fixed by principal  con- cluding  contract with same purchase for lower  price  -Bro- ker’s right to commission -power of agents.                 principal--Principal

HEADNOTE:       The  appellant, an estate broker, was employed by  the respondent  by a letter dated 5th May, 1943, to negotiate  a sale  of  certain  property on the ,,terms  mentioned  in  a commission  note  which ran as follows:  I   .....do  hereby authorise  you  to  negotiate the sale of  my  property  27, Amratolla Street, free from all encumbrances at a price  not less  than Rs. 1,00,000.  I shall make out a good  title  to the  property.  If you succeed in securing a buyer  for  Rs. 1,00,000,  I shall pay you Rs. 1,000 as  your  remuneration. If  the price exceeds Rs. 1,05,000 and does not  exceed  Rs. 1,10,000,  I  shall  pay you the whole of  the  excess  over Rs.1,05,000 in addition to your remuneration of Rs. 1,000 as stated  above.   In case you can secure a buyer at  a  price exceeding Rs. 1,10,000, I shall pay you twenty-five percent. of  the excess amount over Rs. 1,10,000 in addition to  Its. 6,000 as stated above.  This authority will remain  in force for  one  month from date."  In pursuance of  this  contract the  appellant found two persons ready and willing  to  pur- chase  the property for Rs. 1,10,000 on the 2nd June and  by letters  exchanged  with them he purported to  conclude  the contract  for the sale of the propertY, and on the 3rd  June communicated  the same to the respondent.   The  respondent, however, cancelled the authority of the appellant on the 9th June and on the same date entered into an  agreement with  a nominee  of  the said persons for a sale of the property Rs.



1,05,000  and eventually executed    a conveyance  in  their favour  for Rs. 1,05,000.  The appellant instituted  a  suit against the respondent for Rs. 6,000.     Held, per KANIA C.J., FAZL ALl, PATANJALI SASTRI and DAS JJ.--(i)  that  a house or estate agent is  in  a  different position  from a broker at the Stock Exchange owing  to  the peculiarities of the property with which he has to deal, and an  owner employing an estate agent should not, in  the  ab- sence of clear words to that effect, be taken to have autho- rised  him to conclude a contract of sale; but the  lack  of such  authority  is not inconsistent with  an  understanding that  the  agent  is not to be entitled  to  his  commission unless the owner and the purchaser introduced by the agent 31 carried the transaction to completion; (ii) that even if the commission note in the present case were to be construed  as making  payment of commission conditional on the  completion of  the  transaction, the appellant having  "negotiated  the sale "and "secured buyers" who made a firm offer to buy  for Rs.  1,10,000, acquired the right to the payment of  commis- sion  on the basis of that price subject only to the  condi- tion  that  the buyers should complete  the  transaction  of purchase and sale;  and as this condition was fulfilled when the  buyers eventually purchased the property  in  question, the  appellant’s  right to commission on that  basis  became absolute, and could not be affected by the circumstance that the respondent for some reason of his own sold the  property at a lower price.    MAHAJAN J.--Under the terms of the commission note in the present  case  the appellant had authority to enter  into  a binding contract on behalf of the defendant, and, as he  had entered into such a contract he was entitled to the  commis- sion  of Rs. 6,000 according to the terms of the  commission note.   Even conceding that he had no such authority,  under the  terms of the commission note the agent was entitled  to his remuneration as soon as he introduced a buyer ready  and willing to purchase for the price fixed by the owner, wheth- er the owner completed the transaction or not.    Luxor  (Eastbourne)  Ltd. v. Cooper (  [1941]  A.C.  108) distinguished.   Chadburn  v.  Moore (67 L.T. 257), Rosenbaum v.  Belson  ( [1900]  2 Ch. 267), Durga Charan Mitra v. Rajendra  Nararain Sinha  (36 C.L.J. 467), Wragg v. Lovett ([1948] 2. All  E.R. 969) referred to.

JUDGMENT:    APPEAL  from the High Court of Judicature at  Cal  cutta: Civil Appeal No. XLIV of 1949.    This  was an appeal by special leave from a judgment  and decree of the High Court of Judicature at Calcutta  (Hatties C.J. and Mukherjea J.) dated 5th January 1948 which varied a judgment  passed by a single Judge sitting on  the  Original Side  of  the same High Court (Gentle J.) dated  11th  June, 1945. The facts of the case and the arguments of the Counsel appear fully in the judgment. M.C. Setalvad (A. K. Sen with him),    for the appellant. B. Sen, for the respondent.     1950.  March 14.  The judgment  of Kania C. J, and  Fazl Ali, Patanjali  Sastri and Das JJ., was delivered by  Patan- jali Sastri J.: Mahajan J. delivered a separate judgment. 32 PATANJALI SASTRI J.--This is an appeal by special leave from



a judgment and decree of the High Court    of Judicature  at Fort William in West Bengal dated 5th January, 1948,   which varied  a  judgment and decree passed by a single  Judge  on 11th June, 1945, on the Original Side of the same Court.     The  appellant who is carrying on business as an  estate broker  in  Calcutta was employed by the respondent  on  the terms  mentioned in a commission letter dated the  5th  May, 1943, to "negotiate the sale" of premises No. 27,  Amratolla Street,  Calcutta, belonging to him.  In pursuance  of  this contract the appellant found two persons who were ready  and willing  to purchase the property for Rs. 1,10,000,  and  by letters exchanged with them on 2nd June, 1943, he  purported to  conclude  a contract for the sale of  the  property  and communicated the same to the respondent by a letter of  even date.  The respondent, however, entered into an agreement on 9th  June, 1943, with a nominee of the said persons for  the sale of the property for Rs. 1,05,000 and eventually execut- ed a conveyance in their favour on 8th December, 1943.     Thereupon  the appellant brought the suit alleging  that the  contract concluded by him with the purchasers  for  Rs. 1,10,000 on the 2nd June, 1943, was binding on the  respond- ent  and claimed that he was entitled to the payment of  Rs. 6,000  as remuneration in accordance with the terms  of  his employment as he had done all that he was required to do  on behalf of the respondent.  In the alternative he claimed the same  sum as damages for breach of contract.  In defence  to the suit the respondent pleaded, inter alia, that the appel- lant  had  no authority to conclude a binding  contract  for sale  with any one, that the purchasers refused to  complete the  transaction alleging that they had been induced by  the fraudulent misrepresentation of the appellant to agree to  a price of Rs. 1,10,000, that the subsequent sale was effected independently  of the appellant, and that the appellant  was not therefore entitled to any remuneration or damages, 33      Gentle  J. who tried the suit found that the  terms  of the appellant’s employment did not authorise him to conclude a  contract of sale and that the letters of 2nd June,  1943, did not effect a contract of sale binding on the respondent. The  learned Judge, however, rejected the respondent’s  case that the purchasers refused to purchase on the ground of any fraudulent  misrepresentation by the appellant and that  the negotiations were later resumed afresh directly between  the respondent  and the purchasers, and came to  the  conclusion that  the agreement to sell of the 9th June, 1943,  and  the subsequent conveyance of 8th December, 1943, were due solely to  the  efforts of the appellant in  bringing  the  parties together  as potential buyers and seller. The learned  Judge refused  to accept the suggestion that the sale was in  fact effected  for  Rs. 1,10,000 as not being  supported  by  any evidence but found that the  reduction  of  the price by Rs. 5,000 from Rs. 1,10,000 for which the purchasers were  ready and  willing  to  buy the property, was made  only  for  the purpose  of depriving the appellant of his legitimate  remu- neration of Rs. 6,000.  He accordingly held that the  appel- lant, who had performed his part of the contract by  finding two  persons who were ready, able and willing to buy at  Rs. 1,10,000 was entitled to the commission claimed. The  Division  Bench (Harries C.J. and Mukherjea  J.)  which heard  the appeal of the respondent, agreed with  the  trial Judge  that the appellant’s authority did not extend to  the concluding  of a binding contract for sale of the  property, but  differed from his view that all that the appellant  was required  to do was to introduce a purchaser who  was  ready and willing to buy for Rs. 1,10,000 and that he was entitled



to  his commission whether or not the property was  sold  at that price or at all.  They held, following certain observa- tions of Lord Russell of Killowen and Lord Romer in the case next  mentioned,  that the appellant, having  undertaken  to "negotiate  the sale" and to "secure a buyer", could not  be said  to have either secured a buyer or negotiated the  sale "unless the sale actually took place or at least a  contract had been entered into ".  As, 34 however,  a sale did take place between the persons in  pro- duced by the plaintiff and the defendant, and as that  sale, in  the  view also of the learned Judges,  was  the  "direct result of the plaintiff’s negotiations", they held that  the appellant  was entitled to commission but only on the  price mentioned in the sale deed, namely,Rs. 1,05,000 which,  they found was the price actually received by the respondent.  As to  why  the respondent accepted a  reduced  price,  Harries C.J.,  who  delivered the judgment of the  Court,  observed: "All  that is known is that persons who undoubtedly  made  a firm  offer  of Rs. 1,10,000 for  this  property  eventually bought  it for Rs. 5,000 less.  I strongly suspect that  the price  was reduced at the defendant’s instance but I  cannot find  it  as a fact ".  In support of their  view  that  the appellant  was  not  entitled to any  commision  above  that payable  on  a purchase price of Rs.  1,05,000  the  learned Judges relied on the decision of the House of Lords in Luxor (Eastbourne) Ltd. v.Cooper (1), where it was held that, in a contract to pay commission upon the completion of the trans- action  which the agent was asked to bring about, there  was no  room  for implying a term that the principal  shall  not without  just cause prevent the agent from earning his  com- mission, and that it was open to the principal to break  off negotiations  and  refuse to sell even after the  agent  had produced a customer who was ready and willing to purchase on the  principal’s terms. Applying what they conceived  to  be the  principle of that decision, the Appellate Bench  varied the decree of the trial Judge by reducing the amount payable to the appellant to a sum of Rs. 1,000. The commission letter runs as follows:    "I,  Animendra Kissen Mitter of No. 20-B, Nilmoni  Mitter Street,  Calcutta, do hereby authorise you to negotiate  the sale  of my property,  27, Amratolla Street, free  from  all encumbrances at a price not less than Rs. 1,00,000.  I shall make  out a good title’ to the property.  If you succeed  in securing a buyer for Rs. 1,00,000 I shall pay you Rs.  1,000 as your remuneration.  If the price exceeds Rs. 1,05,000 and does not (1) [1941] A.C. 108. 35 exceed Rs. 1,10,000 I shall pay you the whole of the  excess over  Rs. 1,05,000 in addition to your remuneration  of  Rs. 1,000 as stated above.  In case you can secure a buyer at  a price exceeding Rs. 1,10,000 I shall pay you twenty-five per cent. of the excess amount over Rs. 1,10,000 in addition  to Rs.  6,000 as stated above.  This authority will  remain  in force for one month from date".     In  the absence of clear words expressing the  intention of  the  parties it is possible to construe these  terms  in three  different  ways corresponding to the  three  patterns into which commission contracts with real estate brokers may broadly be said to fall. In the first place, the letter  may be  read  as authorising the appellant not only  to  find  a purchaser ready and willing to purchase the property at  the price required but also to conclude a binding contract  with him  for the purchase and sale of the property on behalf  of



the  respondent. Secondly, the contract may be construed  as promising  to reward the appellant for merely introducing  a potential buyer who is ready, able and willing to buy at  or above the price named, whether or not the deal goes through. And lastly, the commission note may be understood as requir- ing the appellant to find such a purchaser without authoris- ing  him to conclude a binding contract of sale  but  making commission contingent upon the consummation of the  transac- tion. As stated already, the first of these  interpretations was  rejected by the learned trial Judge as well as  by  the Appellate Bench, but it was pressed upon us by Mr.  Setalvad on  behalf of the appellant.  We are unable to  accept  that view.  The contract specifies only the price required by the respondent but does not furnish the broker with other  terms such  as  those relating to the payment of  the  price,  the investigation  and approval of title, the execution  of  the conveyance, the parties who are to join in such  conveyance, the costs incidental thereto and so on. In fact, the- agree- ment  of  sale dated the 9th June 1943 entered into  by  the respondent  with the purchasers contains  detailed  stipula- tions  on  all these and other matters.  Mr.  Setalvad  laid stress on the statement in the commission note that the sale was to 36 be  free from encumbrances and that a "good title" would  be made  out, but this is no more than a general indication  of the nature of the bargain proposed and is perfectly consist- ent  with  an  understanding that further  details  will  be subject  to negotiation between the respondent and the  pur- chaser when found.     As pointed out by Kekewich J. in Chadburn v. Moore(1)  a house  or  estate agent is in a different position   from  a broker  at the stock exchange owing to the peculiarities  of the property with which he is to deal which does not pass by a  short  instrument as stocks and shares do but has  to  be transferred after investigation of title as to which various special  stipulations, which might be of particular  concern to  the owner, may have to be inserted in a  concluded  con- tract relating to such property.  The parties therefore   do not  ordinarily contemplate that the agent should  have  the authority to complete the transaction in such cases. That is why it has been held, both in England and here, that author- ity  given to a broker to negotiate a sale and find  a  pur- chaser, without furnishing him with all the terms, means "to find a man willing to become a purchaser and not to find him and  make him a purchaser":  see Rosenbaum v. Belson(2)  and Durga Charan Mitra v. Rajendra Narayan Sinha(3).     Mr.  Setalvad next suggested, in the  alternative,  that the  second  interpretation  referred to  above,  which  was favoured  by the trial Judge, should be adopted,  and  that, inasmuchs,  in  that view also, the appellant had  done  all that  he  was required to do when he introduced to  the  re- spondent  two prospective buyers who were ready and  willing to  buy  the premises for Rs. 1,10,000, he was  entitled  to commission  on that basis.  Learned counsel  criticised  the view of the Appellate Bench, who adopted the third construc- tion,  as  illogical and inconsistent, and argued  that,  if authority to secure a buyer were to be taken to mean author- ity to find one who is not only ready and willing to buy but also  becomes  eventually a buyer in order  to  entitle  the agent to his commission, then such authority must of  neces- sity (1) 67 L.T. 257.     (2) [1900] 2 Oh. 267.    (8) 86  C.L.J. 467. 37



extend to the concluding of a contract of sale, as otherwise the agent could not possibly accomplish the task assigned to him.  We do not see much force in this criticism. As already indicated there are cogent reasons why an owner employing an estate  agent to secure a purchaser should not, in  the  ab- sence of clear words to that effect, be taken to have autho- rised him to conclude a contract of sale, and we cannot  see how  the  lack  of such authority is  inconsistent  with  an understanding  that the agent is not to be entitled  to  his commission unless the owner and the purchaser introduced  by the agent carried the transaction to completion.     In  the  present case, however, it is not  necessary  to decide  whether or not the commission note imports  such  an understanding,  for  a sale was in fact concluded  with  the purchasers introduced by the appellant who has thus, in  any view,  earned his commission, both the trial Judge  and  the Appellate  Bench having found that the  appellant’s  efforts were the effective cause of that sale.  The only question is whether  the  commission  is payable on  the  basis  of  Rs. 1,10,000  for which the appellant brought a firm offer  from the purchasers, or on the basis of Rs. 1,05,000 which is the price mentioned in the conveyance.     As  already  stated,  the Appellate  Bench  based  their decision  on  the  ruling in the Luxor  case.   The  learned Judges  reasoned thus: "In that case the principal  had  re- fused to sell in circumstances which afforded no  reasonable excuse.  Nevertheless,  the House of  Lords,  reversing  the Court  of  Appeal, held that no commission was  payable.  It appears to me that the principle is applicable to this case. Though the agent introduced a purchaser ready and willing to buy for Rs. 1,10,000 the sale for some reason took place  at a  lower  figure.   Even if the  defendant  unreasonably  or without  just  cause  refused to conclude the  sale  at  the higher  figure, nevertheless the plaintiff has no  right  to commission based on that higher figure ".  We are unable  to agree  with  this reasoning and conclusion.  The  ground  of decision  in the Luxor case was that, where  commission  was made  payable  on  the completion of  the  transaction,  the agent’s right to commission was "a purely 38 contingent right" and arose only when the purchase  materia- lised.  As Lord Simon put it "The agent is promised a reward in  return  for an event and the event has not  happened  ". But the position is different where the principal,  availing himself of the efforts of the agent, concludes the sale with the  purchaser introduced by him, as the respondent  did  in the  present case.  As observed by Lord Russell of  Killowen in  the same case, "where a contract is concluded  with  the purchaser,  the  event has happened upon the  occurrence  of which  a right to the promised commission has become  vested in  the agent.  From that moment no act or omission  by  the principal can deprive the agent of his vested right". Apply- ing  that  principle, (even if the commission  note  in  the present  case  were  to be construed as  making  payment  of commission conditional on the completion of the transaction, as it was in the English case) the appellant, having  "nego- tiated the sale" and, secured buyers" who made a firm  offer to buy for Rs. 1,10,000 had done everything he was  required by the respondent to do and acquired a right to the  payment of  commission on the basis of that price which he had  suc- cessfully negotiated, subject only to the condition that the buyers should complete the transaction of purchase and sale. The  condition  was fulfilled when those  buyers  eventually purchased  the  property in question,  and  the  appellant’s right to commission on that basis became absolute and  could



not be affected by the circumstance that the respondent "for some reason" of his own sold the property at a lower price.’ We  accordingly hold that the appellant is entitled  to  the full commission of Rs. 6,000.     The  appeal is allowed, the decree passed on  appeal  in the  Court  below is set aside and that of the  trial  Judge restored.  The appellant will have the costs of this  appeal including  the costs incurred in the lower court as well  as his costs of the appeal in that court.      MAHAJAN  J.--This is an appeal by special leave from  a judgment and decree of the High Court at Calcutta, dated 5th January 1948. By that judgment the High 39 Court varied the judgment and decree of Gentle J. dated 11th June  1945  made in exercise of his  original  jurisdiction, decreeing the plaintiff’s suit for recovery of a sum of  Rs. 6,000.     The appellant is a broker by profession residing at  No. 81/1 Phear Lane, Calcutta, and carries on the business of  a house  agent. The respondent, Animendra Kissen  Mitter,  re- sides in No. 20B, Nilmony Mitter Street, Calcutta.     The appellant was employed by the respondent to  negoti- ate the sale of the respondent’s premises, No. 27, Amratolla Street, Calcutta, on certain terms and conditions on commis- sion  and the question raised by this appeal is whether  the appellant  is entitled to his commission under  the  circum- stances hereinafter mentioned.     The facts are substantially admitted.  By a letter dated 5th May, 1943, the appellant was employed by the  respondent for arranging a sale of the premises above mentioned.   This letter is in the following terms :--     "I,  Animendra Kissen Mitter of No. 20B, Nilmoni  Mitter Street,  Calcutta, do hereby authorize you to negotiate  the sale  of my above property free from all encumbrances  at  a price  not less than Rs. 1,00,000. I shall make out  a  good title  to the property.  If you succeed in securing a  buyer for Rs. 1,00,000  I shall pay you Rs. 1,000 as your remuner- ation.   If  the  price exceeds Rs. 1,05,000  and  does  not exceed Rs. 1,10,000 I shall pay you the whole of the  excess over  Rs. 1,05,000 in addition to your remuneration  of  Rs. 1,000 as stated above.  In case you can secure a buyer at  a price  exceeding Rs. 1,10,000. I shall pay  you  twenty-five per cent. of the excess amount over Rs. 1,10,000 in addition to Rs. 6,000 as stated above.  This authority will remain in force for one month from date."     As  recited  in the letter, the authority given  to  the appellant was to remain in force for one month from 5th  May 1943.  Three days before the termination of the  appellant’s authority, on 2nd June 1943 the plaintiff appellant obtained an offer from two persons namely, 40 Kishorilal  Mahawar and Ramkumar Mahor, for the purchase  of the premises regarding which the plaintiff had been  author- ized to arrange a sale. This letter is in these terms :-     "We  are willing to purchase the above house,  land  and premises at and for the price of Rs. 1,10,000 only free from all encumbrances.     We hereby authorize you to accept the offer for sale  of the above premises from Mr. A.K. Mitter for Rs. 1,10,000  on our behalf and send the confirmation to the vendor Mr.  A.K. Mitter on our behalf." On the same date the plaintiff gave a reply which runs  thus :--     "I  am in receipt of your letter of date and  under  au- thority  from  the owner Mr. A.K. Mitter, I  hereby  confirm



your offer for the purchase of the above premises at and for the price of Rs. 1,10,000 free from all encumbrances."     Simultaneously  with  the issue of this letter  he  gave intimation of this contract to the respondent in the follow- ing terms :--     "Under the authority given to me by you I made an  offer for  the  sale of the above premises to  Messrs.  Kishorilal Mahawar  and  Ram Kumar Mahor of No. 27,  Amratolla  Street, Calcutta, for rupees one lakh and ten thousand only and they have accepted the offer and they have authorized me to  send a  confirmation  to  you of the said  offer.  I  accordingly confirm  the  offer made by you for the sale  of  the  above premises  for  rupees one lakh and ten thousand  only.   The draft  agreement for sale will be sent to you in  the  usual course.     A copy of the letter of Messrs. Kishori Lal Mahawar  and Ram Kumar Mahor accepting your offer is enclosed herewith."     The letter was received by Mitter on 3rd June 1943,  two days  before the termination of the  plaintiff’s  authority. The  respondent made no reply and kept silent.  He  did  not question  the agent’s authority in effecting a binding  con- tract of sale with the purchasers. He did not repudiate  the transaction nor did he 41 expressly  ratify it.  It was the plaintiff’s case  that  he had  accepted  the purchasers’ offer after  getting  express instructions  from the respondent. That case,  however,  was not accepted in the two courts below.     On  3rd  June, 1943, the solicitor  for  the  purchasers wrote  to the solicitor for the agent that as the  offer  of his  client  for the purchase of 27,  Amratolla  Street  had already  been accepted and acceptance communicated  to  him, the  title deeds should be sent so that a conveyance may  be prepared.   At his request inspection of the letter  of  au- thority  was  offered  by the plaintiff and a  copy  of  the letter was sent to him by post.  On receipt of this copy the purchasers’  solicitor assumed a curious attitude.  He  said that  the copy of the letter sent contained different  terms as  to  commission than those contained in  ’the  letter  of authority originally shown to his client.  The plaintiff was charged  with  making a secret illegal gain.   In  spite  of these  allegations it was asserted that the contract  was  a concluded one and that being so, the plaintiff was bound  to refund  to the purchasers whatever moneys he  would  receive from  the vendor.  It appears that the purchasers’  attorney did  not like the idea of the plaintiff pocketing a  sum  of Rs. 6,000 out of the purchase price, and this dislike on the part  of the purchasers for the broker’s commission has  led to further complications resulting in this litigation.     On  9th June, 1943, the purchasers’ solicitor  wrote  to the plaintiff’s solicitor that his client had cancelled  the agreement  of  purchase.   Immediately on  receipt  of  this communication  the plaintiff’s solicitor replied  expressing surprise  at this attitude and accused the other party of  a change  of front with an ulterior motive.  It was said  that further  instructions would be given after getting  instruc- tions from Mitter to whom these letters were forwarded.   It seems that the plaintiff was in  the  dark while writing the letter  of  9th June, 1943, of the  negotiations  that  were going  on behind the scene directly between  the  purchasers and the vendor who had kept absolutely silent all this time. On 9th June the date of the alleged 42 cancellation  of the bargain already made, an agreement  was executed  between Animendra Kissen Mitter, the  vendor,  and



Makkanlal,  a benamidar of Kishorilal Mahawar  and  Ramkumar Mahor (the purchasers) for sale of the premises for a sum of Rs. 1,05,000.  The sale deed in pursuance of this  agreement was  actually executed on 8th December, 1943, in  favour  of the original purchasers and not in favour of the  benamidar. As  pointed out by the learned Chief Justice  who  delivered the judgment of the appellate Bench, possibly some  arrange- ment was made whereby both the defendant and the  purchasers benefited by the insertion of a lower price in. the contract of sale and the transfer deed.  It seems obvious enough that the  defendant having received a firm offer of Rs.  1,10,000 for this property could not have parted with it for Rs. 5000 less except on the basis of some arrangement between himself and  the  purchasers  under which both of  them  shared  the commission  instead of paying it to the broker.  It  was  to the advantage of both of them.     On  14th August, 1943, the appellant filed the suit  out of  which  this  appeal arises for recovery  of  Rs.  6,000, brokerage payable under the commission note. He also claimed relief by way of damages in the alternative.  The  defendant resisted the suit and denied the appellant’s claim.   Gentle J.  who heard the suit, gave judgment for the plaintiff  and passed  a decree for a sum of Rs. 6,000, with  interest  and costs in his favour.  He held that on a true construction of the commission note the appellant’s authority was to find  a purchaser, namely, a man ready, able and willing to buy at a price  acceptable to the respondent and that  the  appellant had  accomplished this when he introduced to the  respondent the purchasers and that he had done all that was required of him.   It  was held that the appellant had no  authority  to conclude a contract of sale and no binding contract of  sale was  made  on 2nd and 3rd June, 1943, that  the  transaction effected nominally in the name of Makkanlal and completed on 8th  December,  1943, in favour of  Kishorilal  Mahawar  and Ramkumar Mahor, was effected solely through the intervention of the appellant who brought 43 the parties together in the capacity at least of a potential buyer  and  seller, that the reduction of the price  by  Rs. 5000 from Rs. 1,10,000 was more than peculiar and that  this reduction  was made for one purpose and that was to  deprive the plaintiff of his remuneration.     The respondent preferred an appeal against this  decree. This was partially allowed by the learned Chief Justice  and Mukherjea  J. on the following findings:that  the  appellant procured two persons, viz. Kishorilal Mahawar and Ram  kumar Mahor,  on  2nd  June, 1943, who were  willing  to  buy  the property  for Rs. 1,10,000, that on.a true  construction  of the  contract of agency no commission was payable  until  at least  a binding contract had been entered into between  the appellant  and the respondent, that the agent could only  be said  to have negotiated the sale if he introduced a  person willing  to  buy who eventually bought, that the  sale  took place  between the persons introduced by the  appellant  and the  respondent and it was the direct result of  the  appel- lant’s agency, that the commission note gave no authority to the appellant to conclude a contract of sale, that Makkanlal with whom the sale agreement dated 9th June was entered into was  a benamidar of Kishorilal Mahawar and  Ramkumar  Mahor, that  the appellant had no right to commission on  a  higher price  than for which the sale was actually made and as  the sale  was actually made for Rs. 1,05,000,  his  remuneration could not exceed a sum larger than Rs. 1,000.  On the  basis of  these  findings the appeal was allowed  and  the  decree granted  by Gentle J. was modified and the plaintiff’s  suit



was decreed in the sum of Rs. 1000. order for costs was made in the appeal.     In  this  appeal Mr. Setalvad for the  plaintiff  raised three  contentions: (1) That the finding of the court  below that  on  a  true construction of the  commission  note  the plaintiff  had no authority to make a binding  contract  re- garding  the sale of this property with the  purchasers  was erroneous;  (2) That even if that finding was  correct,  the plaintiff was entitled to a decree 44 for  the sum of Rs. 6,000, because he had done all  that  he had promised to do for the respondent, viz., he had  secured a purchaser for Rs. 1,10,000, who was ready, able and  will- ing  to  buy the property and that if by reason of  his  own caprice or in collusion with the purchasers, the  respondent did  not  sell the property for Rs. 1,10,000  but  chose  to receive  instead  Rs. 1,05,0O0, the plaintiff could  not  be made  to  suffer.  (3) That on the evidence it  should  have been held that the sale was made for a price of Rs. 1,10,000 and that the amount entered in the sale deed was fictitious.     The  first  thing to see is what the  parties  have  ex- pressed  in the commission note and what is the true  effect of the language employed in it, read in the light     of the material  facts.   As pointed out by  Viscount  Simon,  Lord Chancellor,  in  Luxor  (Eastbourne), Ltd.  v.  Cooper  (1), contracts  with  commission agents do not  follow  a  single pattern  and  the primary necessity in each instance  is  to ascertain with precision -what are the express terms of  the particular contract under discussion.  I have very carefully considered  the terms of this contract in the light  of  the material circumstances and with great respect to the  Judges who decided this case in the High Court, I am of the opinion that  the  authority  given by the principal  to  the  agent authorized  him to enter into a binding contract to sale  on his  behalf. It was not a mere authority authorizing him  to find a purchaser willing, able and ready to buy the premises for  a price mentioned in the document.  The note, to  begin with, confers authority on the plaintiff to negotiate a sale free  from  all encumbrances at a price not  less  than  Rs. 1,00,000.  Then it proceeds to say that the principal under- takes to make out a good title to the property.  It  further provides that if the agent succeeds in securing a buyer  for Rs. 1,00,000, he will be paid a sum of Rs. 1,000 as remuner- ation.   In the concluding part of the note a scale of  com- mission proportionate to the price has been promised in case a  price higher than Rs. 1,00,000 was secured.   In  express words it is said that if the price exceeds Rs. 1,05,000  and does not exceed Rs. 1,10,000, (1) [1941] A .C . 108. 45 "I  shall pay you the whole of the excess over Rs.  1,05,000 in  addition to your  remuneration of Rs. 1,000", that if  a buyer is secured at a price exceeding Rs. 1,10,000, he  will be paid 25 per cent of the excess amount over  Rs.  1,10,000 in   addition to Rs. 6,000.  The authority of the agent  was to remain in force for one month.  In my opinion, the  terms of  the note as regards the property being free from  encum- brances and in respect of the guarantee about title indicate that  the agent was given authority to make a  binding  con- tract. In a bare authority conferring power on a broker  for introducing a customer, these stipulations would  ordinarily find no place.  The words "to negotiate a sale" standing  by themselves may not authorize an agent to make a contract  of sale.  But here they do not stand by themselves.   They  are followed by two important conditions adverted to above.  The



agreement  further lays down that if the broker succeeds  in securing  a  buyer,  he will get  a  certain   remuneration. Gentle  J.  observed that the word "securing" here  had  the meaning  of "obtaining a buyer".  I have consulted the  same dictionary as the learned Judge did and I find that the true meaning of the expression "securing a buyer" is "to obtain a buyer  firmly  ".  It is not possible in business  sense  to secure a buyer firmly unless he is bound by an offer and  an acceptance.  Otherwise, he is entitled to withdraw the offer at  any time before acceptance and it cannot in this  situa- tion  be  said that a buyer has been  secured  firmly.   The word" secure" has not the same meaning as the word "find" or "procure".  It gives an idea of safety and certainty.  If  a buyer is ensured, he is said to be secured and no buyer  can be said to be ensured till he is bound by his offer and that cannot  happen unless it stands accepted.  The  agent  could only  secure a buyer in the strict sense of the term  if  he had  authority to enter into a binding contract.   The  word "buyer" when used in a strict sense also means "a person who has  actually made the purchase"  The authority given to  an agent  to  secure a buyer therefore gives him  authority  to enter  into  a binding contract of sale with  him.   Without such an authority it 46 was  not possible to secure a buyer. I am further  supported in  this  view by the language employed in the  document  in respect  of the payment of the commission.  When  the  price secured was Rs. 1,10,000, the broker was entitled to 25  per cent.  of the excess. It is difficult to think of an  excess in relation to price in a stipulation for commission  unless the agent has been given an authority to make a contract  of sale.  If the scope of the authority is only to introduce  a customer ready, able and willing to buy the property with an option  to the principal to accept or to refuse  the  offer, then it would  have been drawn up in a different language.     The  subsequent  conduct of both the parties  to  the  . agreement very strongly supports this view. The evidence  of such  conduct is relevant in this case because,  as  pointed out  by Viscount Simon, L.C., in the case  already  referred to,  the phrase "finding a purchaser" is itself not  without ambiguity.   Here  the phrase is "securing  a  purchaser  ". This  phrase similarly is not without ambiguity.   The  evi- dence of conduct of the parties in this situation as to  how they  understood  the  words to mean can  be  considered  in determining the true effect of the contract made between the parties.  Extrinsic evidence to determine the effect  of  an instrument is permissible where there remains a doubt as  to its  true meaning.  Evidence of the acts done under it is  a guide  to  the intention of the parties in such a  case  and particularly  when acts are done shortly after the  date  of the  instrument.  (Vide para. 343 of Hailsham Edn. of  Hals- bury, Vol. 10, p. 274).     So  far  as the conduct of the agent  is  concerned,  he accepted  the  offer and under his own  signature  sent  the letter of acceptance to the purchasers. In the letter  writ- ten  by him to his principal he specifically refers  to  his authority. The correspondence above mentioned clearly  shows that  both  the  purchasers  and the agent  thought  that  a concluded  contract had been made. Information of  this  was given to the vendor and though he did not speak, his silence in the circumstances of the case seems as eloquent as speech would have 47 been.   He never repudiated the contract made by  the  agent but  behind his back entered into a fresh contract with  the



same persons who had been secured by the agent in a  surrep- titious  manner.  In the witness box he assumed a  dishonest and untruthful attitude.  The learned trial Judge pronounced him a liar and rightly too.  He asserted complete  ignorance about the subsequent contract of sale and fixed all blame on to  his son When asked about the sale price on the  contract of 9th June, 1943, his answer was that he knew nothing about this  and  said that because his son asked him to  sign  the deed  he  did sign it and that was all that  he  knew.  When faced with the sale deed, he said that he did not know  what his son had told him as to what was written in the deed.  He added  that he did not know what consideration was  paid  to him  for the sale. He further professed not to know  whether the  sale  price went into his banking account or  was  even entered in the account books. After a great deal of prevari- cation he was made to accept the document of 5th May,  1948, and its terms. He admitted that on 3rd June he had a conver- sation  with  the purchasers and was informed by  them  that they had entered into a bargain with the broker and that the broker had deceived them about the commission and  therefore they  would not buy the house. He admitted that he  got  the letter sent by the plaintiff, but gave no explanation as  to why  he sent no reply to that letter. With great  difficulty he  was made to accept his signature on the postal  acknowl- edgment  about the receipt of the letter sent by the  broker to him informing him of the concluded bargain made with  the purchasers, and he had to admit that he got that letter from the  broker. He also admitted that he took no  objection  to the letter written by the broker before Kishoribabu had told him  the  story about the commission of two  per  cent.   In further  cross-examination he admitted that what was  stated by  the  broker in the letter of the 2nd June  was  correct. The  whole evidence given by the defendant consists of  eva- sive  statements  and his ultimate resort was in  lapses  of memory.   It  is quite clear from his  deposition  that  the respondent  accepted the contract made by the agent and  was clearly under the 48 belief  that  the agent had not exceeded  his  authority  in entering  into a binding contract with the purchasers. I  am therefore  of  the opinion that the authority given  to  the agent in this case was an authority to enter into a  binding contract of sale and this he did and he was therefore  enti- tled to his commission of Rs. 6,000.     The  learned single Judge and the learned Judges of  the Court of Appeal found otherwise on this part of the case  in view  of certain decisions of English Courts and a  decision of  a  Division  Bench of the Calcutta High  Court.   In  my opinion, none of those cases touch the present case.  Unless the  language of two documents is identical, an  interpreta- tion placed on one document is no authority for the proposi- tion  that  a  document differently  drafted,  though  using partially similar language, should be similarly interpreted.     In Hamer v. Sharp(1) Sir Charles Hall, V.C.,  considered the  case of an authority of an agent for sale appointed  by the  owner of an estate.  The document in that case  was  in these terms :--     "I request you to procure a purchaser for the  following freehold property, and to insert particulars of the same  in your  Monthly Estate Circular till further notice, viz.,  my beer house and shop No. 4 and No. 6 Manchester Road,  Tenant No.  4, William Galloway, gilder, and No. 6, Albert  Vaults, Henry Holmes, beer retailer, and work rooms above.   Present net rent, pound 150, price pound 2800, when I will pay you a commission  and expenses of fifty pounds.  About six  years’



lease unexpired." The Vice-Chancellor observed as follows :--     "The  question  is whether, when an owner of  an  estate puts it into the hands of an estate agent for sale,  stating a price for and giving particulars of the property to enable him  to inform intending purchasers, but giving no  instruc- tions as to the absolute disposal, and none as to the  title of the property, and mentioning none of those special stipu- lations which it might be proper to insert in conditions  in reference to the title, (1) L.R. 19 Eq. 108, 49 that is sufficient authority to the agent to sign a contract for  the  sale of the property for the price stated  in  the instructions, without making any provision whatsoever as  to title.  In considering whether the instructions of  October, 1872,  were  a sufficient authority to the  agent  for  that purpose,  I cannot help expressing an opinion that  such  an authority  to  an  agent on the part of a  vendor  would  be highly imprudent, as the purchaser would then be entitled to require, on completion, attested copies of all documents  of title, and the expense of them would swallow up, to a  great extent,  the  purchase money.  This estate agent  must  have known  that  if this property had been offered for  sale  by public auction there would have been conditions to guard the vendor  against  being subject to certain expenses,  and  to prevent  the contract becoming abortive by reason of a  pur- chaser  requiring  a strictly marketable  title.   Could  he suppose  that he was invested with authority to sign a  con- tract without considering what it should contain as  regards title  ?   As an intelligent and well  informed  person,  he could not suppose that he was properly discharging his  duty to  his  principal  when he signed  the  contract  which  he signed; such a contract was not one within the scope of  his authority to sign."     The case therefore stood decided on the construction  of the  document.  It was remarked that in those  circumstances it was not necessary to decide what words would confer  such an authority.  Having said so, the learned   Vice-Chancellor proceeded to observe as follows :--     "but  I nevertheless state my opinion to be,  that  when instructions  are given to an agent to find a  purchaser  of landed  property, he, not being instructed as to the  condi- tions  to  be inserted in the contract as to title,  is  not authorized to sign a contract on the part of the vendor.     This case can hardly be said to be an authority for  the construction  of  the agreement that we are called  upon  to construe in the present case. Considerable emphasis was laid in  that  case on the point that no  instructions  had  been given as to the conditions that had to be 50 inserted in the agreement as to title.  In the present  case the agent was told that the principal guaranteed  marketable title.  He was further told that the sale should be free  of encumbrances.  All the material conditions of sale were thus contained in the present agreement.      The next case on which considerable reliance was placed in  the courts below is the case of Chadburn v.  Moore  (1). In  this case an advertisement appeared in the  Daily  Tele- graph in these words :--      "Forced  sale by order of the  mortgagees--thirty  four well  built houses, situated at Grays, close to the  station on  the London, Tilbury, and Southend Railway,  within  easy reach of the docks, all let to respectable tenants at  rents amounting to pound 620 per annum. Held for about ninety-five



years  at ground rents amounting to pound 146;  price  pound 3500,  of  which  pound 3000 can remain  on  mortgage.   For further  particulars  apply to Messrs. Pinder,  Simpson  and Newman, 33 and 34, Savilerow, London, W."      In response to this advertisement the plaintiff in that case, James Chadburn, called on Messrs. Pinder, Simpson  and Newman,  a firm of surveyors and estate agents, for  further information.   He then went to see the houses and came  back and  made  an offer to purchase them, which was  reduced  to writing.   It appeared from the evidence that the offer  was to  be submitted by Mr. Newman to his client the  defendant, and the plaintiff was to return the next day for an  answer. Newman  saw  the  defendant, who gave  him  instructions  to withdraw  five of the houses, and fixed the price,  but  did not, according to the evidence given in court, give instruc- tions to Newman to enter into a binding contract.  Later  on the  plaintiff called on Messrs. Pinder, Simpson and  Newman and  two  letters were exchanged between  them,  which  were letters  of offer and acceptance for the twenty-nine  houses at  Grays.  The offer and acceptance were forwarded  by  the defendant to the estate agents.  The defendant on  receiving this offer wrote a letter saying inter alia:- (1) 67 L.T. 257 51     "I  think you were, as you usually are, a little  prema- ture  in  actually  entering into what might  be  a  binding contract.  It is always best to have an offer and acceptance subject to a formal contract being entered into... " To this Newman replied:- "The  offer for the above was accepted under  your  definite instructions and is a very good get out for you." Kekewich  J.,  who  decided this case,  gave  the  following judgment :--     "Having  heard  Mr. Newman, who was called  without  the plaintiff knowing what he was going to say, and having  read the  correspondence,   I have little doubt that I  have  the real transaction--which is a mere transaction between  prin- cipal  and agent--before me.  It might be’ that a  different colour would be put upon the matter by the cross-examination of  Mr. Moore, but this was not done, and he is entitled  to have  judgment  upon  the point of  law.  Moore  undoubtedly authorized Newman to find a purchaser for the houses. It  is true the expression does not come out on the correspondence. On the second occasion Newman appears to have been instruct- ed  to negotiate a sale. Whatever else he did do, Moore  did not  in  express.  terms authorize Newman to  enter  into  a contract.Newman was to find a purchaser, and to negotiate  a sale.   Is  that sufficient ? No evidence was  given  as  to custom; no evidence was brought to show that the position of a  house or estate agent resembles that of a broker  on  the Stock  Exchange  or any other exchange. A  house  or  estate agent  is in a different position, owing to the  peculiarity of  the property with which he has to deal, which  does  not pass by a short instrument as stocks and shares do, but  has to  be transferred after investigation of title and  in  ac- cordance with strict laws.  An agent fox sale of real estate must  be more formally constituted than a seller  of  stocks and  securities of a similar nature.  There is  no  definite authority; in Hamer v. Sharp (1), Hall, V.C., does not (1) 19 Eq. 108. 52 go  so far as to say an estate agent cannot enter  into  any contract, and does not decide the question of authority, but only states his opinion.  I must perforce refer to Prior  v. Moore (1), where I indicated my own opinion distinctly, that



instruction  to a house agent to procure a purchaser and  to negotiate  a sale does not amount to authority to the  agent to  bind his principal by contract.  Here  the  circumstance must not be forgotten that Moore on the second occasion told Newman  what  he was prepared to take  for  the  twenty-nine houses.   Newman then jumped at the conclusion that  he  had power at that price to enter into a contract. That is in  my opinion  not  sufficient, and unless  express  authority  is given  to the agent to sell, and for that purpose  to  enter into  a binding contract, the principal reserves  his  final right to accept or refuse. "     In  this case there was no written document between  the principal  and  the agent.  From the correspondence  it  was inferred  that the principal had asked the agent to  find  a purchaser or to negotiate a sale and it was held that within these  words  an authority to sell could not be  spelt  out. Not  only is the language of the document with which we  are concerned  different, but the evidence in the case  particu- larly about the conduct of the parties is materially differ- ent.  The  observations made by the learned  Judge  must  be taken to be limited to the facts found by him.  The  expres- sions "find a purchaser"  "procure a purchaser" "negotiate a sale"  standing  by  themselves may not  ’be  sufficient  to confer  authority on the agent to enter into a binding  con- tract  on behalf of the principal; but as I  have  indicated above,  the words in the present case are such as by  neces- sary implication conferred authority on the agent for making a binding contract.     The  next case is Durga Charan Mitra v. Rajendra  Narain Sinha (2), a Bench decision of the Calcutta High Court.  The document  considered in that case bears considerable  resem- blance with the document in the present case. (1) 3 T.L.R.624.            (2) 36 C.L.J.467. 53 It was in these terms :--     "I  hereby  authorize you to negotiate the sale  of  the lands  at Tolligunge I have recently purchased  from  Messrs Martin  and Co.  If you can secure a purchaser  to  purchase the  same at the gross value of Rs. 16,000, I shall pay  you Rs.  200 as your remuneration. If you be able to raise   the price  to any amount above Rs. 16,000, you will be  entitled to  the excess amount fully and I shall be bound to  mention the whole amount in the conveyance.     Please note that this letter of authority will remain in force  for  a fortnight only to  complete  the  transaction; after that this letter will stand cancelled."     The agent acting on this authority sold the property. On receipt of this letter the vendor informed the agent that he would  not sell the land.  On the acceptance of the agent  a suit  was  brought  for specific  performance.  Sir  Asutosh Mookerjee  who delivered the judgment of the Bench  referred to  the  cases of Hamer v. Sharp (1), Prior  v.  Moore  (2), Chadburn v. Moore (3), and also Rosenbaum v. Belson (4), and observed  that it was well settled that an estate or  house- agent,  authorized  to procure a purchaser, has  no  implied authority  to enter into an open contract of  sale,  because the  transaction  mentioned is as specified in  the  letter, viz., to negotiate a sale after securing a purchaser.  There is  similarity in the language employed in the letter  dealt with in this case and the letter of authority with which  we are  concerned; but read as a whole, the two  documents  are drafted with ’different intents and the true effect of  both is  not the same.  There was no mention of the  title  being guaranteed  by the vendor or of the sale being made free  of encumbrances  in  that case. There was no evidence  of  sur-



rounding circumstances or of the conduct of the parties.  On the  other hand, the plaintiff who was himself  a  solicitor realized  the difficulties of the situation and  endeavoured to alter the foundation of his claim.  He conceded that as a broker he had no authority to sell the property and that he  (1) 19 Eq. 108.            (8) 67 L.T. 257,  (2) 3 T.L.R. 624           (4) (1900) 2 Ch. 267. 54 could  not have taken a conveyance of sale of the  plot.  In the  present  case the attitude adopted by the  parties,  as already  pointed out, was entirely different.   Sir  Asutosh Mookerjee  also cited the case of Rosenbaum v.  Belson  (1). In  this case the learned Judge made the following  observa- tions:-     "  To my mind there is a substantial difference  between those  expressions.   Authorizing  a man to  sell  means  an authority  to  conclude a sale; authorizing him  to  find  a purchaser  means  less  than that--it means to  find  a  man willing to become a purchaser, not to find him and also make him a purchaser."     In Saunders v. Dence (2), Field J.  distinguished  Hamer v.  Sharp(s), saying that ’all that Hall, V.C.,in that  case decided, as I understand it, was that if you go to an estate agent,  and tell him you have a property to sell,  and  that you want a purchaser, and you tell him what you have made up your  mind shall be the price, and to a certain extent  what shall  be  the conditions, and you instruct him to  try  and find  a purchaser, that is not sufficient, under those  cir- cumstances, to authorize the agent to make a contract  with- out any conditions whatever with regard to the title’.     I have been unable to find any case in which it has been held  that  instructions given by A.B. to sell for  him  his house, and an agreement to pay so much on the purchase price accepted, are not an authority. to make a binding  contract, including an authority to sign an agreement.     In  my opinion, on the terms of the instrument  in  this case  and in view of the relevant evidence the correct  con- clusion  to  draw is that the agent had authority  to  enter into  a binding contract with the purchaser and that he  did and is therefore entitled to succeed in the case.  Reference in this connection may be made to Wragg v. Lovett (4), where Lord Greene, M.R., put the proposition in these words :--     "Whether or not the agents were authorized (or, what  in law is the same thing, reasonably understood (1) (1900) 2 Ch. 267.               (3) 19 Eq. 108. (2) 52 L.T. 644.                    (4) [1948] 2 A.E.R. 969. 55 themselves  to be authorized) to make this  particular  con- tract",     and  it was held that the proper inference from all  the facts  of the case was that the defendant was  satisfied  to allow  his   agents to make whatever contract  they  thought best  and relied on them to protect his interests  provided, and provided only, that they obtained the desired  statement from  the  plaintiff as to his intention to  remain  in  the house.   The answer to the question depends on the facts  of each individual case and though authority to make a  binding contract has not to be lightly inferred from vague or ambig- uous  language  but from substantial grounds,  that  however does not mean that in express words it should be stated that the agent is authorized to sell the property.     The  learned Chief Justice in the judgment under  appeal observed that "the agent had undertaken to negotiate a  sale and  secure  a buyer.  He could not be said to  have  either secured a buyer or negotiated a sale unless a sale  actually



took  place or at least a contract of sale had been  entered into".   If  that is the correct construction of  the  note, then  in  my judgment, the true implication of the  note  is that  the agent was authorized to enter into a binding  con- tract, because otherwise he could not have secured a  buyer. Later  on, the learned Chief Justice while referring to  the case of Rosenbaum v. Belson(1), took the view that authoriz- ing  a man to sell meant  an  authority  to conclude a  sale and  authorizing a man to find a purchaser meant  less  than that.  It meant finding a man willing to become a purchaser, not to find him and also make him a purchaser.  If that  was the  duty entrusted to the agent, then he had  clearly  per- formed his duty and was entitled to his commission.     For the reasons given above I am of the opinion that the plaintiff had authority to enter into a binding contract  on behalf of the defendant and he entered into such a  contract and  thereby earned the commission which he has  claimed  in the suit and he is entitled to a  (1) [1900] 2 Ch. 267.     8 56 decree  in  the sum of Rs. 6,000 which the trial  Judge  had given to him, with all costs throughout.     Conceding for the sake of argument that the construction that I have placed on the agreement entered into between the principal and the agent is not the correct one, the question arises .whether in that event the decision under appeal  can be  maintained.  I am inclined to the opinion that  even  on the construction placed by the trial Judge on the commission note the view taken by him was the correct one and the court of  appeal arrived at a wrong conclusion by giving too  much importance to certain obiter observations of Lord Russell of Killowen and Lord Romer in Luxor (Eastbourne) Ltd. v.  Coop- er(1).   In  this very case it was pointed out  by  Viscount Simon L.C. that there were at least three different  classes of  cases  in which the question of a  right  to  commission could arise.  He states the first of them in these terms :--     "There  is  the class in which the agent is  promised  a commission by his principal if he succeeds in introducing to his principal a person who makes an adequate offer,  usually an offer of not less than the stipulated amount. If  that is all that is needed in order to earn his reward, it is  obvi- ous that he is entitled to be paid when this has been  done, whether this principal accepts the offer and carries through the  bargain  or not.  No implied term is needed  to  secure this result."     In my opinion, the present case falls within this  class of case and commission became payable on the introduction of a willing buyer by the agent to the principal.     In Burcheil v. Cowrie & Blockhouse Collieries Ltd.(2) it was observed by their Lordships of the Privy Council that if an agent brings a person into relation with his principal as an  intending purchaser, the agent has done the most  effec- tive, and, possibly, the most laborious and expensive,  part of  his work, and that if the principal takes  advantage  of that work, and, behind the back of the agent and unknown  to him, sells to the purchaser thus brought into touch with him on terms (1) [1941] A.C. 108.          (2) [1910] A.C. 614. 57 which  the  agent theretofore advised the principal  not  to accept,  the  agent’s act may still well  be  the  effective cause  of the sale and that there can be no real  difference between  such  a case and those cases  where  the  principal sells  to the purchaser introduced by the agent at  a  price



below the limit given to the agent.     In  Inchbald v. Western Neilgherry Coffee etc.  Co.  (1) Willes J. thus lays down the rule of law applicable to  such cases :--     "I  apprehend that wherever money is to be paid  by  one man  to another upon a given event, the party upon  whom  is cast the obligation to pay, is liable to the party who is to receive the money if he does any act which prevents or makes it less probable that he should receive it." The  rule has been stated by Story on Agency at page 404  in the following terms :--     "The general rule of law, as to commissions, undoubtedly is, that the whole service or duty must be performed, before the  right to any commissions attaches, either  ordinary  or extraordinary; for an agent must complete the thing required of him, before he is entitled to charge for it.  In the case of brokers employed to sell real estate, it is well  settled that  they are entitled to their commission when  they  have found a purchaser, even though the negotiations are conduct- ed and concluded by the principal himself;  and  also  where there is a failure to complete the sale in consequence of  a defect in title and no fault on the part of the brokers."     In  my judgment therefore, Gentle J. was right  when  he held  on  the interpretation placed by him on  the  document that  the plaintiff had earned his commission in full  inas- much  as  he  had secured a buyer who was  ready,  able  and willing to buy the property for Rs. 1,10,000.     As I have indicated above, if the word "buyer" is to  be construed  in a strict sense, then it must be held that  the broker  had authority to secure a buyer of that type and  he could only do so by making a binding (1)  17 C.B. (N.S.) 733. 58 contract with him.  On the other hand, if the word is  taken to mean a potential buyer, such a buyer having been secured, the  agent  was  entitled to the commission  that  had  been promised to him.     It  is  now  convenient to consider the  case  of  Luxor (Eastbourne)  Ltd. v. Cooper(1) in some detail because  cer- tain observations made by Lord Russell of Killowen and  Lord Romer  are  the basis of the decision of the  learned  Chief Justice.   In this case no commission note was addressed  to the  broker and the contract was not contained in any  docu- ment.  Evidence in support of the commission  agreement  was oral  and  its terms had to be deduced from  that  evidence. Viscount Simon L.C., out of the materials from which express contract had to be pieced together, reached the result  that the bargain was this:     "If  a party introduced by the respondent should buy the cinemas for at least pound 1,85,000, each of the two  appel- lants would pay to the respondent pound 5,000 on the comple- tion of the sale."     No such sale took place, and in those circumstances   it was  held that there could be nothing due to the  respondent on  the  terms of the express bargain.  It was  then  argued that  since  the proposed purchasers introduced by  the  re- spondent  were  and  remained willing and able  to  buy  the properties  for the minimum price, while the appellants  did not close with the offer, the appellants  were  liable   in. damages  to  the respondent for breach of an implied term of the  commission  contract.  In the statement  of  claim  the implied  term was said to be that the appellants  would"  do nothing to prevent the satisfactory completion of the trans- action so as to deprive the respondent of the agreed commis- sion."   The breach pleaded was the failure to complete  the



contract  of sale with the respondent’s client and the  dis- posal  of the subject-matter in another quarter.   The  Lord Chancellor  was  of the opinion that the  suggested  implied term was not necessary in this contract and it was  observed that  in contracts made with commission agents there was  no justification for introducing an implied term unless it  was necessary to (1) [1941] A.C. 108. 59 do so for the purpose of giving to the contract the business effect which both parties  to it intended it should have.     Lord  Russell of Killowen in his opinion said  that  the only  right of the plaintiff was to receive  his  commission out of the purchase moneys if and when received.  His  right was  a  purely contingent right.  He stood .to earn  a  very large  sum at comparatively small pains, taking the risk  of either  side  withdrawing from the negotiations  before  any binding  contract of sale and purchase was concluded, or  of the contract for any reason not being carried to completion. In this view of the case the action was bound to fail and no occasion arose for pronouncing on the correctness or  other- wise  of the view expressed by the Court of Appeal in  Trol- lope  & Sons v. Martyn Brothers (1).  Then it was said  that as the question of these commission contracts was  discussed at great length, that furnished an excuse for stating brief- ly  conclusions  which his Lordship’s mind, free as  it  was from the fetter of previous decisions, reached.  In  dealing with the subject the following observations were made :--     "I  can find no safe ground on which to base the  intro- duction  of any such implied term. Implied terms, as we  all know,  can  only be justified under the compulsion  of  some necessity.  No  such compulsion or necessity exists in   the case under consideration. The agent is promised a commission if  he  introduces  a purchaser at a  specified  or  minimum price.  The  owner is desirous of selling. The  chances  are largely in favour of the deal going through, if a  purchaser is  introduced.  The agent takes the risk in the hope  of  a substantial  remuneration for comparatively small  exertion. In  the case of the plaintiff his contract was made on  Sep- tember  23, 1935; his client’s offer was made on October  2, 1935.   A sum of I0,000 (the equivalent of the  remuneration of a year’s work by a Lord Chancellor) for work done  within a period of eight or nine days is no mean reward, and is one well   worth  a  risk.   There  is  no  lack   of   business efficacy..in sUCh a contract, I even (1) [1934] 2 K.B. 436. 60 though  the  principal  is free to refuse  to  sell  to  the agent’s client.     The  position will no doubt be different if  the  matter has proceeded to the stage of a binding contract having been made between the principal and the agent’s client.  In  that case  it can be said with truth that a ’purchaser’ has  been introduced  by  the  agent; in other words,  the  event  has happened  upon the occurrence of which a right to the  prom- ised  commission has become vested in the agent.  From  that moment  no act or omission by the principal can deprive  the agent of that vested right."     It  is the observations last quoted which are the  basis of the decision of the learned Chief Justice in the  present case.  It seems to me that these observations had  reference to  cases  visualized  by Lord Russell of  Killowen  in  the earlier  part of this quotation with specific  reference  to the  facts found in that case and cannot apply to all  cases where  the  word ’ purchaser ’ or ’buyer’ has  been  loosely



used in a different context.     Lord  Romer in his opinion made the  following  observa- tions :-     "But  supposing  that a contract by one  person  to  pay another a sum of money in the event of the latter performing an  unsolicited service to the former is as much subject  to an  implied condition as if the latter had been employed  to perform  the service, the condition is in general  one  that merely  imposes on the former a negative and not a  positive obligation.   If I employ a man for reward to build a  house on  my land I subject myself to an implied condition that  I will do nothing to prevent him carrying out the work.  But I am  under no implied obligation to help him earn the  reward whether  by the supply of building materials  or  otherwise. But  there  are  exceptional cases where in  a  contract  of employment the employer is under a positive obligation.  If, for  instance,  I employ an artist to paint  my  portrait  I subject myself to the positive obligation of giving him  the requisite  sittings.  The question, then, to  be  determined upon the hypothesis that I mentioned just now is this: Where an owner of 61 property  employs an agent to find a purchaser,  which  must mean at least a person who enters into a binding contract to purchase,  is it an implied term of the contract  of  agency that, after the agent has introduced a person who is  ready, willing  and able to purchase at a price assented to by  the principal,  the principal shall enter into a  contract  with that person to sell at the agreed price subject only to  the qualification  that  he may refuse to do so if he  has  just cause or reasonable excuse for his refusal ? This qualifica- tion  must  plainly be added, for the  respondent  does  not contend,  and  no one could successfully contend,  that  the obligation  of the principal to enter into a contract is  an unconditional one."     The  learned Chief Justice relying on the last  part  of the  above  quotation  reached the conclusion  that  in  the present  case as the duty of the agent was to secure a  pur- chaser,  it  could not be held that the purchaser  had  been secured  till  the  contract of sale was  concluded  by  the vendor  with him and that the actual sale having  been  con- cluded  for a sum of Rs. 1,05,000, the plaintiff could  only get his remuneration on the basis of the price for which the sale  was made and not on the basis of the offer the  plain- tiff  had secured.  It seems to me that when Lord Romer  was laying  down  that a purchaser in such  contracts  means  at least  a person who enters into a binding contract  to  pur- chase, he had in mind the contract with which he was dealing in that case. I am free to think that Lord Romer had not  in mind commission notes wherein the word "buyer" or  "purchas- er" had been employed in a loose sense.     In Jones v. Lowe(1), wherein the instrument was in these terms--     "In  the  event of my introducing a purchaser,  I  shall look  to  you  for the payment of the  usual  commission  in accordance  with  the  scale fixed by  the  Auctioneers  and Estate Agents Institute ",     Hilbery  J. said that had he been free of authority,  he should  have  thought  that there were  strong  grounds  for saying that what every owner of a house who desired to (1) [1945] 1 K.B. 73. 62 sell  it  expected  a house agent to do, was  to  bring  the property fairly to the notice of persons who resorted to him for houses and endeavour to persuade one of them to buy  it.



The learned Judge further observed as follows :--     "If the agent introduces someone who is perfectly  will- ing  to go through with the purchase at a price  which  will satisfy  the vendor, it would seem that the agent  has  done everything  that the parties contemplate that he should  do, for  they  do  not contemplate that the  agent  should  have anything  to do with the actual completion of  the  transac- tion.   He is to find a person who will pay the price  which is asked for the property, and the contract is entered  into on the basis that the person so found will be the person  to whom the owner of the property will sell.     It  seems to me hard, if an agent has done to  the  full extent what the parties contemplated that he should do, that he  should not be entitled to say ’ I have done what I  con- tracted  to do because I have introduced someone willing  to purchase  although he never in fact became the. actual  pur- chaser’.   I do not feel, however, that it is open to me  to put  that construction on the words of the contract  in  the present  case because I think that the observations made  in the  House of Lords, and particularly those of Lord  Russell of  Killowen  and Lord Romer in Luxor (Eastbourne)  Ltd.  v. Cooper  (1), show that they were clearly of opinion that  if an  agent is employed to introduce a purchaser for  a  house and  before  the purchaser has entered into  a  binding  and legal contract, the house is withdrawn from the market,  the agent cannot say that he has earned his commission."     In  a later case, E.H. Bennett v. Millet (2),  the  same learned Judge had to deal with a case where the contract was in these terms :--     "We  confirm  that  in the event of  our  introducing  a purchaser  who is able and willing to complete the  transac- tion,  our commission will be in accordance with the  recog- nized scale...".     The plaintiffs introduced a prospective purchaser,  Whom the court found to have been at all times able (1) [1941] A.C. 108.        (2) (1948) 2 All. E.R. 929. 63 and  willing to purchase, but the defendant refused to  com- plete.   It was argued by the defendant that the  qualifica- tion  of the word "purchaser" in the plaintiffs’ letter  was otiose and therefore should be struck out and the plaintiffs had  not performed the contract until they had introduced  a person  who actually. completed the purchase.  It  was  held that the expression "a purchaser who is able and willing  to complete  the  transaction" meant not a person who  did,  in fact,  ultimately  purchase the property, but  one  who  was prepared  to purchase it at the seller’s price, and, as  the estate agents had found such a person, they were entitled to their commission.  The learned Judge further stated that  in ordinary  parlance  we do not use the  word  "purchaser"  as necessarily restricted to a person who actually completes  a transaction  of purchase and sale.  In my  judgment,  there- fore,  on  the  alternative interpretation  which  has  been placed  by the two courts below on the commission  note  the word "purchaser" cannot be read in the strict sense in which it  was read in Luxor’s case (1), but should be read in  the sense  in which it is loosely used in common  parlance,  and that  being  so, the decision under appeal  cannot  be  sus- tained.     Mr. Setalvad cited a number of Indian authorities  where the  words  "buyer" and "purchaser" had not been  given  the strict  meaning  that had been given in  Luxor’s  case  (1). Similarly, the words "lender" and "borrower" had been  given the meaning of "potential lender" and "potential  borrower". It  is, however, unnecessary to enter into a  discussion  of



all those cases as it does not in any way advance the matter beyond  what I have already said.  It is unnecessary  to  go into  the  third contention of Mr. Setalvad in view  of  the above decision.     For the reasons given above I agree with the  conclusion reached  by  my brother, Patanjali Sastri, in  the  judgment just delivered by him, that the appeal be allowed with costs throughout.                          Appeal allowed. Agent for the appellant: S.P. Varma. Agent for the respondent: Sukumar Ghose. (1) [1941] A.C. 108. 9 64