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Jeffrey Realty, Inc. v. Ventice

A-0506-05T1 (N.J. Super. App. Div. 2006) (Unpublished)

BROKERS; COMMISSIONS; STATUTE OF FRAUDS—An oral real estate broker’s commission agreement is enforceable followed up by writing setting forth the terms of the oral agreement, including the commission rate, but if the broker and its customer never agreed to the commission rate, the written follow-up will not satisfy the requirements of the Statute of Frauds.

A broker sued a seller to enforce an oral commission agreement. The broker had introduced a potential buyer to a seller. The broker and seller discussed a commission arrangement, but no agreement was reached as to the amount of the commission. The broker contended that the parties had reached an oral agreement in which the seller would pay a six percent commission on the sale of the property. The seller claimed that no agreement was reached as to the commission rate. The broker continued to set up meetings between the buyer and seller, believing that it had reached an agreement as to the commission. As a result, the broker sent the seller a commission agreement listing the names of the parties, the property, and the six percent commission. The commission agreement made no reference to any prior oral agreement between the broker and seller. The seller never signed the commission agreement. The buyer and seller entered into a contract and the closing took place, but the broker never received a commission. The broker sued the seller for breach of contract, for the reasonable value of its services, and for unjust enrichment.

The lower court concluded that the broker was not entitled to a commission. It found that the broker did not have a written and signed commission agreement as required under the Statute of Frauds. It also found that the broker did not comply with an exception to the Statute of Frauds which would have permitted an oral agreement followed up with a writing. Under N.J.S.A. 25:1-16(d), an oral commission agreement is enforceable if followed up by a writing setting forth the terms of the oral agreement, including the commission rate. The lower court found that the broker and seller never agreed to an essential element of an enforceable agreement, the commission rate. The lower court also noted that the written commission agreement submitted by the broker never made reference to a prior oral agreement as required by the statute. Therefore, it concluded that by failing to strictly adhere to the requirements of the Statute of Frauds, there was no enforceable agreement. The lower court also refused to permit the broker to recover a commission based on quasi-contract or unjust enrichment theories, finding that to do so would result in an end-run around the strict requirements of the Statute of Frauds. The Appellate Division affirmed.


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