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Beit Midrash Series P'ninat Mishpat

Chapter 70

Paying an Agent For a Deal That Did Not Go Through

Various Rabbis13 SHEVAT 5769
805
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Case:
P'ninat Mishpat (576)
Various Rabbis
69 - Work Under a Questionable Agreement
70 - Paying an Agent For a Deal That Did Not Go Through
71 - Signs of Mechilla (Relinquishing of Rights)
Load More
The plaintiff (=pl), is a lawyer who served as a real estate agent for a potential sale involving the defendant (=def) and a buyer. After two long meetings between def and the buyer in pl’s office, def told pl to prepare a contract. In it, pl’s fee for his services was set at .5% of the sale, dependant on the signing of the contract. Subsequently, def changed one of the conditions and the deal fell through. Pl demands half of the proposed fee for his services, as the preparation of the contract deserves pay even when the transaction did not occur.


Ruling : The Rosh (Shut 105:1) discusses a similar case of a go-between for a transaction that almost was completed, who asked to be paid for his significant efforts. The Rosh says that such an agent is not paid unless the deal is completed, provided the parties did not trick him and were not negligent regarding the deal. His source is the gemara (Bava Kama 115b) that says that if one asked another to do something on his behalf, which he was unable to complete, the agent is reimbursed only for expenses and his toil.
In this case, the deal did not go through because of a fundamental disagreement between def and the buyer and not due to negligence. Therefore, he is not paid in full, as an agent. However, perhaps he should be paid for his work as a lawyer, in preparing the contract. Beit din determined that common practice is that a lawyer is not paid for drawing up a contract, unless stipulated otherwise, if the deal is not completed. Furthermore, it has become commonplace recently for lawyers to serve as real estate agents, and their legal work becomes incorporated into the service. Customarily, he is treated as an agent until the contract is signed, only after which legal-related work is considered to be performed as a lawyer. Furthermore, the contract was a standard one, which required minimal work by pl. Therefore, whether from the perspective of classical halacha or that of common practice, def does not have to pay pl.
Beit din looked into four secular court rulings on similar matters. There are indications that in this case, at least some courts would obligate def to pay. However, this is based on the court’s perception that legal services in the midst of real estate negotiations fall under the category of a lawyer’s job. However, the nature of this involvement, as is commonly practiced today, is that of an agent, for which one is entitled only after a signing takes place. Although halacha gives significance to legal precedent, it is only to the extent that it reflects the standard practice of society. In this case, it does not, and payment is not necessary.
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