Estate Agency Agreement (2)
|Circular No. 01-07 (CR)
Under general contract law principles, a contract may be vitiated by the uncertainty of its fundamental terms. The rights of the parties under the contract may be adversely affected.
Practitioners should bear in mind that the validity period of the prescribed estate agency agreement is a fundamental term for ascertaining the parties' respective rights and obligations. Uncertainty and dispute may arise if "Until further notice" or "Until the Property is sold (or rented)" is entered as the expiry date of the validity period. When an estate agent enters into an estate agency agreement with his/her client, the commencement date and the expiry date of the agreement must be clearly stated therein.
If the agent and the client agree to amend or prolong the validity period, they may do so by amending and initialing against the relevant clause.
Section 9(3) of the Practice Regulation provides that estate agents shall not advertise a property at a price or rental different from that instructed by the client concerned. The List Price/Rental in the estate agency agreement (Form 3/5) is the price/rental indicated by the vendor/landlord for the purpose of issuing advertisements in respect of the relevant property. Some clients may opt for a range of price/rental instead of a fixed sum when listing.
Routine compliance checks by the Authority have revealed some unreasonable ranges of price such as "$0-$1,500,000" or "$1-$2,000,000" as the list price. Such list prices may affect the certainty of the estate agency agreement and give rise to disputes.
Estate agency practitioners should serve their clients with honesty, fidelity and integrity. When assisting their clients in listing, they should provide the latest market information for the purpose of enabling their clients to arrive at a realistic list price/rental.