School Work

Agency III

Notes on Agency
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  Inland Realty Investment Service, Inc. v. CA   Facts:   ãGregorio Araneta, through the Asst. Mngr. Eduqu, granted Inland Reailty a 30-day authority to sell its 9,800 shares of stock in Architects' Bldg for P1,500   ã[Inland Realty] planned their sales campaign, sending proposal letters to prospective buyers. One such prospective buyer to whom a proposal letter was sent to was Stanford Microsystems w/c counter-proposed to buy 9,800 shares offered at P1,000.00 per share   ãUpon Inland's receipt of the said counter-proposal, it immediately wrote Araneta a letter to register Stanford Microsystems, Inc. as one of its prospective buyers . Araneta, Inc., thru its Assistant General Manager J. Armando Eduque, replied that the price offered by Stanford was too low and suggested Inland to see if the price and terms of payment can be improved upon by Stanford. ãThe authority to sell given to plaintiffs by defendants was extended several times: from Oct. 2, 1975 and the last was on Dec. 2, 1975 for 30 days. ãInland was able to sell the shares to Standford Microsystems for P13,500,000 on July 8, 1977.   ãWhen Inland demanded for there broker’s fee of 5%, the next day, it was denied on the ground that the claim had no legal basis. TC: Since the sale took place when the authority to sell expired on Jan.1, 1976, they were no longer privy to the consummation and documentation thereof.   CA : Sale took place 1 yr and 5 days after expiration of the agency contract and authority to sell, TC affirmed. Issue/Held: Whether or not Inland is entitled to the commission? - NO   Ratio:   ãInland alleges that in the Letter dated October 28, 1976, Gregorio Araneta III, in behalf of Araneta, Inc., renewed petitioner Inland Realty's authority to act as agent to sell the former's 9,800 shares in Architects' for another thirty (30) days from same date. But such was never produced in trial. Such letter was really an extension from Oct. 28, 1975 and not 1976. ãThey also allege that regardless of whether or not their agency contract and authority to sell had expired, they are automatically entitled to their broker's commission merely upon securing for and introducing to private respondent Araneta, Inc. the buyer in the person of Stanford which ultimately acquired ownership over Araneta, Inc.'s 9,800 shares in Architects’.   ãInland did not succeed in outrightly selling said shares under the predetermined terms and conditions set out by Araneta, Inc., e.g., that the price per share is P1,500.00. They admit that they could not dissuade Stanford from haggling for the price of P1,000.00 per share with the balance of 50% of the total purchase price payable in five (5) years at 12% interest  per annum  . From September 16, 1975 to January 1, 1976, when petitioners' authority to sell was subsisting, if at all, petitioners had nothing to show that they actively served their principal's interests, pursued to sell the shares in accordance with their principal's terms and conditions, and performed substantial acts that proximately and causatively led to the consummation of the sale to Stanford of Araneta, Inc.'s 9,800 shares in Architects’.   ãThe Court of Appeals cannot be faulted for emphasizing the lapse of more than one (1) year and five (5) months between the expiration of petitioners' authority to sell and the consummation of the sale to Stanford, to be a significant index of petitioners' non-participation in the really critical events leading to the consummation of said sale, i  . e  ., the negotiations to convince Stanford to sell at Araneta, Inc.'s asking price, the finalization of the terms and conditions of the sale, the drafting of the deed of sale, the processing of pertinent documents, and the delivery of the shares of stock to Stanford. Certainly, when the lapse of the period of more than one (1) year and five (5) months between the expiration of petitioners' authority to sell and the consummation of the sale, is viewed in the context of the utter lack of evidence of petitioners' involvement in the negotiations between Araneta, Inc. and Stanford during that period and in the subsequent processing of the documents pertinent to said sale, it becomes  undeniable that the respondent Court of Appeals did not at all err in affirming the trial court's dismissal of petitioners' claim for unpaid brokerage commission.   ãPetitioners were not the efficient procuring cause in bringing about the sale in question an July 8, 1977 and are, therefore, not entitled to the stipulated broker's commission of 5% on the total price.   Julio Danon v. Antonio Brimo & Co.   Facts:   ãThis action was brought to recover the sum of P60,000, alleged to be the value of services rendered to Brimo & Co by Danon as a broker.   ãDanon alleged that he was employed by Brimo & Co., through its manages Antonio Brimo, to look for a purchaser of its factory known as Holland American Oil Co., for the sum of P1,200,000, payable in cash; that the defendant promised to pay the plaintiff, as compensation for his services, a commission of five per cent on the said sum of P1,200,000, if the sale was consummated, or if the plaintiff should find a purchaser ready, able and willing to buy said factory for the said sum of P1,200,000; that subsequently the plaintiff found such a purchaser, but that the defendant refused to sell the said factory without any justifiable motive or reason therefor and without having previously notified the plaintiff of its desistance or variation in the price and terms of the sale.   TC:  Ordered Brimo to pay Danon its commission, P60k.   Issue/Held: Whether or not Danon is entitled to the commission? - NO   Ratio:   Summary of Facts by the SC: ã(1) That Antonio A. Brimo, in a conversation with the, Julio Danon, about the middle of August, 1918, informed the latter that he (Brimo) desired to sell his factory, the Holland American Oil Co., for the sum of P1,200,000; (2) that he agreed and promised to pay to the plaintiff a commission of 5 per cent provided the latter could sell said factory for that amount; and (3) that no definite period of time was fixed within which the plaintiff should effect the sale. It seems that another broker, Sellner, was also negotiating the sale, or trying to find a purchaser for the same property and that the plaintiff was informed of the fact either by Brimo himself or by someone else; at least, it is probable that the plaintiff was aware that he was not alone in the field, and his whole effort was to forestall his competitor by being the first to find a purchaser and effect the sale. Such, we believe. was the contract between the plaintiff and the defendant, upon which the present action is based. (so not exclusive)   ãIt seems that immediately after having an interview with Mr. Brimo, as above stated, the plaintiff went to see Mr. Mauro Prieto, president of the Santa Ana Oil Mill, a corporation, and offered to sell to him the defendant's property at P1,200,000. The said corporation was at that time in need of such a factory as the plaintiff was offering for sale, and Mr. Prieto, its president, instructed the manager, Samuel E. Kane, to see Mr. Brimo and ascertain whether he really wanted to sell said factory, and, if so, to get permission from him to inspect the premises. Mr. Kane inspected the factory and, presumably, made a favorable report to Mr. Prieto. The latter asked for an appointment with Mr. Brimo to perfect the negotiation. In the meantime Sellner, the other broker referred to, had found a purchaser for the same property, who ultimately bought it for P1,300,000. For that reason Mr. Prieto, the would be purchaser found by the plaintiff, never came to see Mr. Brimo to perfect the proposed negotiation.   ãUnder the proofs in this case, the most that can be said as to what the plaintiff had accomplished is, that he had found a person who might have bought the defendant's factory if the defendant had not sold it to someone else. The evidence does not show that the Santa Ana Oil Mill had definitely decided to buy the property in question at the fixed price of P1,200,000. The board of directors of said corporation had not resolved to purchase said property; and even if its president could legally make the purchase without previous formal  authorization of the board of directors, yet said president does not pretend that he had definitely and formally agreed to buy the factory in question on behalf of his corporation at the price stated.   ãThe plaintiff claims that the reasons why the sale to the Santa Ana Mill was not consummated was because Mr. Brimo refused to sell to a Filipino firm and preferred an American buyer; that upon learning such attitude of the defendant the plaintiff endeavored to procure another purchaser and found a Mr. Leas, who delivered to the plaintiff a letter addressed to Mr. Brimo, offering to buy the factory in question at P1,200,000. the offer being good for twenty-four; that said offer was not accepted by Brimo because while he was reading the letter of Leas, Sellner came in, drew Brimo into another room, and then and there closed the deal at P1,300,000. The last statement is admitted by the defendant.   Ruling of the SC:   ã It will be noted that, according to the plaintiff's own testimony, the defendant agreed and promised to pay him a commission of 5 per cent  provided he (the plaintiff) could sell the factory at P1,200.000 ãIt will also be noted that all that the plaintiff had accomplished by way of performance of his contract was, that he had found a person who might have bought the factory in question had not the defendant sold it to someone else   ãUnder these circumstances it is difficult to see how the plaintiff can recover anything in the premises. It is perfectly clear and undisputed that his services did not any way contribute towards bringing about the sale of the factory in question. He was not the efficient agent or the procuring cause of the sale.” ãThe broker must be the efficient agent or the procuring cause of sale. The means employed by him and his efforts must result in the sale. He must find the purchaser, and the sale must proceed from his efforts acting as broker.   ã Sibbald vs. Bethlehem Iron Co  .: the duty assumed by the broker is to bring the minds of the buyer and seller to an agreement for a sale, and the price and terms on which it is to be made, and until that is done his right to commissions does not accrue.   ãIt follows, as a necessary deduction from the established rule, that a broker is never entitled to commissions for unsuccessful efforts. The risk of a failure is wholly his. The reward comes only with his success… He may have introduced to each other parties who otherwise would have never met; he may have created impressions, which under later and more favorable circumstances naturally lead to and materially assist in the consummation of a sale; he may have planted the very seed from which others reap the harvest; but all that gives him no claim. It was part of his risk that failing himself, not successful in fulfilling his obligation, others might be left to some extent to avail themselves of the fruit of his labors.   ãOne other principle applicable to such a contract as existed in the present case needs to be kept in view. Where no time for the continuance of the contract is fixed by its terms either party is at liberty to terminate it at will  , subject only to the ordinary requirements of good faith. Usually the broker is entitled to a fair and reasonable opportunity to perform his obligation, subject of course to the right of the seller to sell independently .   ã Zeimer vs. Antisell:   The undertaking to procure a purchaser requires of the party so undertaking, not simply to name or introduce a person who may be willing to make any sort of contract in reference to the property, but to produce a party capable, and who ultimately becomes the purchaser. ãAyres vs. Thomas: The defendant sent a proposal to a broker in these words: If you send or cause to be sent to me, by advertisement or otherwise, any party with whom I may see fit and proper to effect a sale or exchange of my real estate, above described I will pay you the sum of $200. The broker found a person who proposed to purchase the property, but the sale was not affected. Held: That the broker was not entitled to compensation.   ãIt is clear from the foregoing authorities that, although the present plaintiff could probably have effected the sale of the defendant's factory had not the defendant sold it to someone else, he is  not entitled to the commissions agreed upon because he had no intervention whatever in, and much sale in question. It must be borne in mind that no definite period was fixed by the defendant within which the plaintiff might effect the sale of its factory. Nor was the plaintiff given by the defendant the exclusive agency of such sale. Therefore, the plaintiff cannot complaint of the defendant's conduct in selling the property through another agent before the plaintiff's efforts were crowned with success. 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