What’s wrong with the Contract

For most of you, the Business Transfer Agent’s (BTA’s) contract (a) had little or no CONSIDERATION (what they promise to do for you – without Consideration it cannot be a contract); (b) were not the EFFECTIVE CAUSE of any INTRODUCTION (a viewing) or the cause of a sale or transfer of your business, property or assets (see the GREAT ESTATES GROUP v Digby 2011 Appeal Court case on the Internet) (but beware of relying on this case if your are being pursued for  liquidated damages); (c) For most of you they have provided no VAT INVOICE and (d) no STRICT PROOF of their expenses in advertising your business; (e) had clauses which breach the Estate Agents (Provision of Information) Regulations because onerous terms such as SOLE SELLING RIGHTS were not printed in bold and explained or brought to your attention.

The Property Ombudsman (TPO) Code of Practice for Commercial & Business Agents, effective from 1st June 2019 states at Paragraph 5n: “You must give up your rights to any commission if a buyer or tenant first introduced by you to the client’s property goes on to buy or rent the property through another agent, in circumstances where that buyer or tenant was introduced by the other agent more than six months after the date your agency ended”. Those exact same words are also in the 1st October 2016 version at Paragraph 2f.

RTA’s Terms fail to accord with TPO Guidance – they state at Clause 6 “I/we acknowledge that I/we will be liable to pay your commission as described in clause 3b following a cancellation of this agreement, for up to a maximum period of 2 years from the date of cancellation of this agreement. I/we further acknowledge that if I/we instruct, or have previously instructed another agent to sell my/our business and/or property on a sole agency, joint sole agency or a sole selling right basis, I/we may have a liability to pay fees to more than one agent. IT SHOULD READ 3a, not 3b, see below:

Clause 3b states “If unconditional contracts for the sale of the Business and/or Property are exchanged after the termination of the period in which you have Sole Selling Rights but to a Purchaser who was introduced to me/us during that period or with whom I/we had negotiations about the Business and/or Property during that period.” Note the word ‘CANCELLATION’ in Clause 3a, rather than ‘termination’ in Clause 3b. ‘Cancellation’ is deemed by RTA to be within their ‘irrevocable TWELVE MONTH period’ and RTA usually invoke Clauses 12 and/or 13 where they attempt to claim ‘agreed liquidated damages’.

In RTA’s document it states at Clause 14 “I/We agree that upon me/us or alternatively you serving notice of termination of this agreement in accordance with clause 2, and providing that such that such termination in no way breaches any other clauses contained herein, then I/we agree to pay you the sum of [nine hundred and fifty pounds plus VAT] as a withdrawal fee. This sum is to be paid no later than the expiry of the required notice period, or forthwith if notice is not applicable. I/We understand this fee is to cover any and all work you have carried out in order to earn your commission”. There is a failure of any mention of the 6 month or two year period.

The rights that RTA call Sole selling rights (but which have been judged to fail that definition) beg the question “Why exactly should a withdrawal/termination fee be applicable?” It seems to fail the test of being a “full and final” withdrawal according to Clause 3b !

The above anomalies are often Judged to mean the “contract” is ambiguous and therefore unenforceable. PLUS potentially you will have paid a fee for withdrawal/termination but which the Terms say can still be enforced for up to two years! So if you do decide to terminate, it is best to ensure it is “in full and final settlement”. Please note that RTA and National Business Sales are currently accepting “without admittance of liability, in full and final settlement” offers much lower than the termination fee – possibly because Judges are Dismissing the Claims.

The Business Transfer Agent may not have acted WITH CARE AND SKILL in attempting to advertise or market one’s business or liaise with their customers, thus breaching the terms of the Supply of Goods and Services Act. This Act is still an applicable Act for businesses and business owners.

If the adverts are only distributed by automated e-mail to those who register on the agent’s site – as seems to be the case with Ernest Wilson – if they lack a clear picture of your business that is larger than one inch square, yet the initial draft Sales Particulars had large pictures, then the Sales Particulars can be deemed a written misrepresentation of the end product, the adverts themselves, which also are potentially NOT FIT FOR PURPOSE (Sale of Goods Act)  IF the Agent has taken an up-front fee, they have a fiduciary duty towards you, their customer. (h) For many of you, they took no proof of your Identity BEFORE you signed the contract (Money Laundering Regulations ). (i) For those of you that signed at home, ideally they should have provided you with a cooling-off period – see the Resources section of this CEBTA.org.uk site for more info. (j) For those of you who have been asked for an EPC, strictly speaking this is only needed if you were trying to sell or lease property (real estate). Your landlord needs the EPC, not you. Point out that the Business Transfer Agent should be advertising EPC ratings on their website and the fine is £5K for each property advertised without one, and that Trading Standards should be administering the fine. Write to Trading Standards too. (k) Many of you have contracts not signed by the Sales Rep – therefore breaching TPOS’s Code of Conduct for Commercial Agents. (l) Does it say anywhere that it is a Business-to-Business (B2B) contract? If not, how are you supposed to know? Telling the customer afterwards is unethical.

For those of you that are being sued as an individual, have RTA ever actually asked the business itself for any money? e.g a proper letter or at least a payment request eg Bob Smith, Trading as ABC grocers. For Limited companies, the BTA should have written to The Directors, ABC Ltd (for example) FIRST before they wrote to you. If you have a Court Claim Form with both the company and you named, this fact of non-notification to the Company should go in your Defence. Fill out ONLY a Response Form within 14 days, do not be tempted to write any Defence at this stage. If you have written your own Defence, please seek CEBTA’s help urgently!

You may decide to complain about these breaches and the poor or non-existent service that the Business Agent displayed, to TPO (The Property Ombudsman). If the Agent’s correspndence lacks a TPOS logo, check whether that Agent is a Full Member. Meridian are not full Members – that’s a complaint in itself. TPOS say they cannot intervene once a dispute is in court – but as your case is unlikely to be heard for months, you can say that you don’t expect TPOS to resolve the dispute but you want to make it known that some BTA’s threaten court when you complain. Also complain to Trading Standards and make them aware that the document you signed omits the wording B2B. Include in the letter the effect of the stress of waiting etc. Attach a copy of your contract. E-mail if you’d rather not use the post. Draft your letters to us and we will help you if possible.

There are sample letters on NATIONAL DEBTLINE, a free service. Also check BUSINESS DEBTLINE. Always try to negotiate a without-liability settlement offer at least a month before actually attending court, but do not be persuaded into paying the whole amount just because of the supposed ‘case law’ the BTA’s quote – it is often incomplete, irrelevant or inapplicable to your circumstances, or just plain wrong!