LAW OF OBLIGATION ACT, PART 8, CHAPTER 37

Chapter 37

BROKERAGE CONTRACT 

  • 658. Definition of brokerage contract

(1) By a brokerage contract, one person (the broker) undertakes to act as an intermediary for another person (the mandator) who enters into contracts with third persons or to indicate to the mandator opportunities for entering into contracts with third persons, and the mandator undertakes to pay a fee (a brokerage fee) for such activities to the broker.

(2) The provisions regulating authorisation agreements apply to brokerage contracts unless the provisions of this Chapter provide otherwise.

  • 659. Restriction on acceptance of performance of obligation

A broker has the right, on behalf of the parties to a contract regarding which the broker is the intermediary or to which the broker refers a party, to accept payments and the performance of other obligations arising from the contract if the broker holds separate authorisation therefor.

  • 660. Prohibition on giving incorrect advice

A broker shall not suggest to the mandator that the mandator should enter into a contract with a person with regard to whom the broker is aware or ought to be aware of circumstances which give reasonable basis for doubt as to whether the person will be able to perform the obligations arising from the contract in an appropriate manner.

  • 661. Failure to disclose identity of party to contract

Upon the request of a party to a contract for whom the broker is acting as an intermediary, the broker may refuse to disclose the identity of the party to the other party.

  • 662. Preservation of documents

A broker shall preserve documents related to the professional activities of the broker for as long as these documents are relevant to protect the interests of a mandator, but not for less than three years. This requirement does not preclude or limit the duties of a broker arising from law related to the preservation of accounting records.

  • 663. Duty to maintain records concerning contracts

(1) A broker shall keep chronological records of all contracts entered into regarding which the broker acts as an intermediary or to which the broker refers a party.

(2) If the parties do not enter into a contract in writing, the broker shall immediately, at the request of the party to the contract for whom the broker acts as an intermediary or who was referred to the contract by the broker, present an extract signed by the broker which sets out the terms and conditions of the contract.

  • 664. Duty to pay brokerage fee

(1) A broker has the right to a brokerage fee as of the entry into a contract as a result of the broker acting as an intermediary or referring a party to the contract.

(2) If, pursuant to a brokerage contract, the right to receive a brokerage fee arises for the broker after performance of an obligation in respect of the mandator arising from the contract regarding which the broker acts as an intermediary or to which the broker refers a party, the broker also has the right to a brokerage fee if the obligation is not performed due to circumstances depending on the mandator.

(3) The right of a broker to a brokerage fee is not affected if the contract regarding which the broker acts as an intermediary or to which the broker refers a party is entered into or an obligation arising therefrom is performed after termination of the brokerage contract.

(4) If a contract regarding which the broker acts as an intermediary or to which the broker refers a party is entered into with a suspensive condition, the broker has the right to demand payment of the brokerage fee only upon fulfilment of the condition. If a contract is entered into with a resolutive condition, the right to the brokerage fee does not extinguish with the fulfilment of the condition.

(5) A broker shall retain the right to a brokerage fee also in the case where a contract entered into under the intermediation or referral of the broker is invalid, provided that the broker was not aware and did not have to be aware of the reason for such invalidity. If a contract is cancelled or a party withdraws from a contract due to a fundamental breach of the contract, the broker does not have the right to a fee if the broker was aware or ought to have been aware that the breach of contract was likely.

(6) If a brokerage contract is entered into for a broker to act as an intermediary in the contraction of marriage or to refer to an opportunity for the contraction of marriage, the obligation arising from such contract is imperfect. Any other obligation which a mandator assumes with regard to a broker is also imperfect if the objective of the obligation is payment of a fee acting as an intermediary in the contraction of marriage or for referring to an opportunity for the contraction of marriage.

  • 665. Size of brokerage fee

If the size of the brokerage fee has not been agreed, it shall be deemed to be the size of the standard local brokerage fee for acting as an intermediary for or referring to the opportunity to enter into such contracts or, in the absence thereof, a reasonable amount of remuneration.

  • 666. [Repealed – RT I 2005, 39, 308 – entry into force 01.01.2006]
  • 667. Reimbursement of expenses of broker

(1) A broker has the right to demand that expenses incurred upon the performance of a brokerage contract be reimbursed only if so agreed separately.

(2) If a contract regarding which a broker acts as an intermediary or to which a broker refers a party is not entered into, the broker still has the right to demand that expenses incurred upon the performance of the brokerage contract be reimbursed if so agreed separately.

  • 668. Activities of broker for benefit of other party

(1) If, contrary to a brokerage contract, the broker has also acted for the benefit of another party to a contract regarding which the broker has acted as an intermediary on behalf of the mandator or to which the broker has referred the mandator, the broker does not have the right to demand payment of a brokerage fee or the reimbursement of expenses by the mandator.

(2) If a broker has acted for the benefit of another party to a contract regarding which the broker has acted as an intermediary on behalf of the mandator or to which the broker has referred the mandator, it is presumed that the parties to the contract shall pay an equal share of the brokerage fee.

  • 669. Specifications of liability of broker

(1) A broker is not liable for the performance of a contract regarding which the broker acts as an intermediary or to which the broker refers a party.

(2) In the case specified in § 661 of this Act, a broker shall be liable for the performance of the obligations by the party to the contract regarding which the broker acts as an intermediary or to which the broker refers the party whose identity the broker refused to disclose.

Disclaimer:

The information contains in this web-site is prepared for educational purpose. This site may be used by the students, faculties, independent learners and the learned advocates of all over the world. Researchers all over the world have the access to upload their writes up in this site. In consideration of the people’s participation in the Web Page, the individual, group, organization, business, spectator, or other, does hereby release and forever discharge the Lawyers & Jurists, and its officers, board, and employees, jointly and severally from any and all actions, causes of actions, claims and demands for, upon or by reason of any damage, loss or injury, which hereafter may be sustained by participating their work in the Web Page. This release extends and applies to, and also covers and includes, all unknown, unforeseen, unanticipated and unsuspected injuries, damages, loss and liability and the consequences thereof, as well as those now disclosed and known to exist.  The provisions of any state’s law providing substance that releases shall not extend to claims, demands, injuries, or damages which are known or unsuspected to exist at this time, to the person executing such release, are hereby expressly waived. However the Lawyers & Jurists makes no warranty expressed or implied or assumes any legal liability or responsibility for the accuracy, completeness or usefulness of any information, apparatus, product or process disclosed or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product process or service by trade name, trade mark, manufacturer or otherwise, does not necessarily constitute or imply its endorsement, recommendation or favouring by the Lawyers & Jurists. The views and opinions of the authors expressed in the Web site do not necessarily state or reflect those of the Lawyers & Jurists. Above all, if there is any complaint drop by any independent user to the admin for any contents of this site, the Lawyers & Jurists would remove this immediately from its site.