Where the amount of commissions is expressly agreed upon, the broker is entitled to the agreed amount. (Sec. 212-218.) Where no rate or special mode of compensation has been agreed on, the broker is entitled to the customary rate. (Sec. 219.)
A custom or usage, when it is reasonable, uniform, well settled and not contradictory to fixed rules of law or the express terms of the agreement, is generally deemed to form a part of the contract. (Sec. 219, 220.) A custom, to bind the parties, must either be known to them or must be so general that they must be supposed to have contracted with reference to it. (Sec. 221, 222.) A custom may be established by presumptive as well as by direct evidence. (Sec. 223, 224.) Rules of real estate boards are binding upon members but not upon non-members, unless such rules are established as a custom. (Sec. 225.)
In the absence of an agreed amount, or of a custom fixing the rate, the broker is entitled to the fair value of his services. (Sec. 226.)
The amount of the broker's compensation is fixed by (1) express agreement of the parties; (2) custom; or (3) by the reasonable value of his services.1
¹ Knaus v. K. B. Co., 142 N. Y. 77 (1894) ; Walker Mfg. Co. v. Knox, 136 Fed. 339 (1905); Jones v. Moore, 30 Ky. Law Rep. 605 (1907).
Sometimes brokers name a fixed amount as their compensation. When this is done and agreed to by the broker's employer, it constitutes an express agreement. An express agreement, however, need not necessarily specify a fixed sum. It is an express agreement if the broker and his employer agree that the broker shall have as his compensation all in excess of a fixed sale price,2 or that the broker shall have a certain part of the "profits" on a sale. When the broker has an express agreement as to his compensation, such agreement controls in case the broker brings about a deal. Such situations are governed by the rules applicable to all contracts. Where there is a valid express contract, there is no place for recovery on a quantum meruit.3
Where on buying property the principal agreed to pay the broker a part of the profits when he sold, and no time for a sale was fixed, it was held that the principal or his representatives could not refuse absolutely to sell; that a sale must be made within a reasonable time, and that after repudiation of the broker's rights he was entitled to recover his part of the "profits" in cash, based upon the then value of the land, less the amounts which would be properly chargeable against a sale price before the net profit could be arrived at. 4
Where the seller causes a breach of the contract of employment and the broker is entitled to damages on account thereof, the measure of damages is either the commission agreed upon, or reasonable compensation for the broker's services.5 And it has been held that where a broker contracted to sell land at a specified price for an agreed commission of five per cent., but a sale was made to the broker's purchaser by the principal for less than the price specified in the agreement, the broker was not entitled to recover the agreed commission but was only entitled to receive reasonable compensation.0
2 See Sec. 215-218 infra.
3 Reams v. Wilson. 147 N. C. 304 (1908), (citing Reed v. Reed, 82 Pa. St. 420; Phelan v. Gardner. 43 Cal. 306; Doty v. Miller. 43 Barb. 529; Bailey v. Chapman. 41 Mo. 537; Monroe v. Snow, 131 111. 136; Breekenridge v. Clarldge, 43 L. R. A. 593).
4 Kauffman v. Balllie, 89 Pac. 548 (Wash. 1907).
A broker may also in effect, by his conduct or otherwise, waive his right to commissions which he has earned. As an illustration, - where a certain amount is agreed upon as commission in case a sale is made, and the broker makes the sale but his principal refuses to complete, the commissions are earned, but if the broker thereafter makes efforts to again sell the property for his principal without demanding the commissions already earned, the broker on making a subsequent sale is not entitled to commissions for the first sale but only on the second.7