Is consulting (project sales) for developer legitimate? Part 2.
Take for example, you are to help your developer friend to sell property. You are not employed by this developer friend, but you strike a deal with him. Let us say, you get 2% commission when you could bring back successful sale for him. He does NOT pay you a penny and you are not under his employment.
In fact, by word of mouth, if anyone could bring a buyer to this developer, he will get 2% commission. Is this agency?
As construed, you are NOT appointed by the developer – principal. You are just passing words around. You have no commitment or authority to enter into a binding contract (as you are not appointed thus NOT authorized). Only upon the buyer who successfully signs a Sale and Purchase Agreement with the developer that this developer friend pays you a “referral fee” as a reward. Referral fee is not a commission. Developer can refuse to pay anytime or for any reason – which is NOT important.
However, is this appointment implied appointment? Is this estate agency practice? The intention is important. If you are taking up this job because of the proposed scheme of payment, it is a fee no less.
When the developer pays a commission or fee upon a successful transaction, it constitutes an intention to a Sale, Letting, Leasing or Purchase via an agent. For, you are an agent who speaks out for his product for sale.
In this respect, you can be an employee, his spouse or an unrelated person. See my posting in justletak.com “Agency vs Employment vs Marriage”* to read about this relationships.
Therefore, to avoid such ambiguity in law, the freelance brokers would ask the developer to allow them to carry their business cards as developer staff and be paid a small salary. In this manner, they can legitimately contract with the public to sell the developer products just like an employed staff. But, if they are not paid a salary, and do not have any employment contract with the developer, they are agents no less. They hold out to public to sell a property which they do NOT own.