Rasmussen & Russo Pty Ltd v Gaviglio [1982] Qd R 571
Agency; duties of the principal; payment of agreed commission.
Facts: Gaviglio wanted to sell some land. He appointed Rasmussen & Russo as agents, promising to pay them $3,500 commission if they found a purchaser willing to buy the land, and who actually completed the purchase. Rasmussen & Russo found a willing purchaser, who signed a contract to purchase the land, but the contract was subject to a condition that the buyer be granted a loan from the bank of New South Wales. The loan, although applied for, was not approved. According to the terms of the contract, this brought the uncompleted transaction to an end. Gaviglio then terminated Rasmussen & Russo's agency. A few days later, the same purchasers were referred to another estate agent who was able to introduce them to a finance organisation willing to lend them the money needed to purchase Gaviglio's land. Accordingly, the purchasers entered into a second contract to buy the same land, in terms of which a commission was payable to the second agent. Rasmussen & Russo sued for payment of the commission they had been promised.
Issue: Were Rasmussen & Russo entitled to the commission on the grounds that it was they who had found the buyer who eventually bought the land?
Decision: The court held that Rasmussen & Russo were not entitled to the commission.
Reason: Firstly, properly interpreted, the contract obliged the principal to pay commission to the agent only if a sale was actually completed, and not simply if a willing buyer was found. Secondly, there must be a proper 'causal connection' between the agent's actions and the eventual sale. In the present case, the sale was not brought about by anything Rasmussen & Russo had done: it was the result of a completely independent set of events.