MSM Consulting Ltd v United Republic of Tanzania

An agent claiming commission for a completed property purchase must establish a concluded contract on the terms alleged. An unaccepted proposal, rejected fee terms, or an indication of an intention to sign later does not suffice. Conduct will imply a contract only where it is necessarily referable to a contract rather than to continuing negotiations.

Even where commission terms refer to a property introduced to, or viewed by, the client, a term will ordinarily be implied that the agent was the effective cause of the purchase. In abortive contractual negotiations, a quantum meruit is available only where justice requires payment. Work undertaken to secure an appointment, without an assurance of payment or a substantial uncompensated benefit to the recipient, will usually remain at the claimant's risk.

MSM Consulting Ltd sought commission, alternatively a quantum meruit, from the United Republic of Tanzania for assistance given while Tanzania sought new London premises for its High Commission.

MSM had shown Tanzanian representatives a number of properties, including 3 Stratford Place, and repeatedly proposed terms providing for commission. Tanzania did not sign or accept those terms and later instructed Knight Frank, which secured the purchase of 3 Stratford Place. MSM contended that an agency contract had arisen, or that it should be paid for its work if no contract existed.

The central issues were whether Tanzania had agreed MSM's terms, whether MSM had earned commission as the effective cause of the purchase, and whether the circumstances justified restitutionary payment for work performed during negotiations.

1. The claim was dismissed. No binding contract arose between MSM and Tanzania. MSM's proposed terms of 6 May 2003 were neither signed nor accepted. Its October 2003 terms were rejected because the proposed commission was unacceptable. The judge rejected the alleged later assurances that Tanzania would sign the terms or pay MSM.
2. An indication that a document would be signed when funds became available was not an acceptance or a confirmation of an engagement. A requirement for recognisable confirmation of instructions, where the proposed contract involved substantial commission, was for both parties' benefit. It could not be treated as waived merely by an indication of future signature. The parties' dealings were equally referable to MSM's attempt to obtain an appointment.
3. Had there been a contract, a term would have been implied that MSM had to be the effective cause of the purchase before earning commission. The principle in Foxtons Ltd v Pelkley Bicknell [2008] EWCA Civ 419 applied, with necessary adaptation, to a purchaser's agent and was not confined to residential consumers. Such a term was consistent with the express commission clauses and reduced the risk of double commission.
4. MSM introduced 3 Stratford Place but was not the effective cause of Tanzania's purchase. After the property had been placed under offer to another buyer, Knight Frank discovered that the sale had stalled, negotiated the return of the contracts to Tanzania, agreed heads of terms and assisted in securing planning consent. MSM did not progress the acquisition through negotiations with the selling agents.
5. The quantum meruit claim also failed. MSM's work before and after the failed fee negotiations was undertaken in the hope of obtaining a contract. Tanzania had given no reliable assurance of payment, had received only limited benefit, and had not acted unconscionably. The services were substantially part of MSM's unsuccessful effort to secure an agency appointment.
6. On the judge's alternative statutory analysis, the Estate Agents Act 1989 did not assist Tanzania. If MSM's terms had been agreed, the stated commission rate would have been sufficiently particular. The terms did not use unexplained agency jargon requiring the statutory form of explanation.

not stated in the judgment.