|
Mere words
04/07/2006 The Star
ARTICLES OF LAW by BHAG SINGH
THE choice of words used can create different messages. Based on what has
been said by one party, the other may become entitled to some rights or
exposed to obligations.
However, sometimes when the time comes to assert the rights based on such
words the person who made them for himself or on behalf of an organisation
may deny making such statements.
If and when this happens, all expectations based on the words spoken or
statements made may be reduced to being of little or no value. Two examples
will illustrate the point.
One reader says he was told by an officer of a lending institution that
there would be no problems having the loan approved for the purchase of a
house. Based on this, he paid a deposit for the house.
However, his loan application was rejected. As a result, the deposit was
forfeited because he could not obtain a loan from another bank within the
stipulated time.
Another reader is an estate agent facing a problem claiming commission from
a developer. Through a negotiator, the estate agent dealt with the
developer’s sales and marketing manager.
Payment of commission was agreed upon if the estate agent could secure a
buyer for the property. Following this, the estate agent secured a purchaser
and a Sale and Purchase Agreement (SPA) was signed.
After the buyer paid the deposit, the estate agent submitted his invoice,
but there was no response.
Later, the developer disclosed that the previous sales and marketing manager
had resigned and the new manager promised to look into the matter but never
got back to him. The end result was that the developer has taken the stand
that it will not pay because there was nothing in black and white.
What are the options available to the ‘victims’ in such situations?
To deal with the first case, there is a need to appreciate that in order to
rely on a statement to establish legal rights, there must be an intention to
create legal relations. Therefore, an off-the-cuff statement made in the
course of a casual inquiry may not have created such legal obligations.
The other aspect is that even if the statement is said to be made formally
the person who made the statement may later deny making the statement.
Alternatively, he may admit having used the said words but claim that they
were taken out of context .
This will result in a dispute as to what was actually said as well as meant
during the conversation and transaction.
If this is the case, the court will, assuming that legal action can be
taken, have to decide what was actually said based on its evaluation of the
evidence by witnesses.
Relying on this and the court’s interpretation of the legal principle, the
outcome will emerge.
The estate agent’s dilemma poses a different problem. The transaction
proceeded on the basis of a verbal promise. Ordinarily, such a promise would
be sufficient to create a binding obligation that could be legally enforced.
However, the practical difficulty that arises is that the manager who made
the promise is no longer working for the company. The developer seems to be
relying on the reason that there are no records confirming the agreement to
pay the commission.
Based on basic principles of the law of contract and subject to any
statutory provisions imposing any limitations relating to estate agents, an
action could be filed against the developer by the reader.
Even though the arrangement was not confirmed in writing, the estate agent
and his negotiator could appear in court as witnesses to give evidence on
what transpired. There is great value in such evidence which is given under
oath and it will at least shift the burden of proof to the developer.
It will not be enough for the developer to say that there is no written
agreement to pay commissions. The developer will have to rebut the evidence
of the estate agent given under oath that there was an agreement to pay a
commission for a sale concluded.
For this the developer will have to call his ex-manager as a witness.
Depending on what the ex-manager says the estate agent’s case could be
strengthened or weakened. This is a risk that cannot be avoided.
Even then at the end of the day, it will depend on whose evidence is
considered more credible by the court. This will help to establish the true
situation on a legal basis.
All these problems merely illustrate the importance of having arrangements
and agreements in writing. This, of course, does not mean that a written
agreement is always a sure guarantee that all will be well in the end! |
