Chan v. Tsang

In Chan v. Tsang (1991) 1 Cal.App.4th 1578, a buyer retained a broker to locate commercial property and to represent the buyer during the purchase. The buyer subsequently refused to complete the transaction, and the broker sued the buyer for the unpaid commission. After reviewing various authorities, the appellate court awarded the broker the unpaid commission, finding: "Buyer retained Broker, Broker located property for Buyer, Buyer agreed to purchase but then refused to complete the transaction without cause. Thus, Buyer is liable to Broker for the commission Broker would have received from Seller had Buyer performed. As the authorities reviewed establish, Broker's right to recover is premised upon Buyer's breach of the implied promise or alternatively upon Broker's status as a third party beneficiary of the contract between Buyer and Seller." (Chan, supra, 1 Cal.App.4th at p. 1587.) In Chan, the contract between the buyer and seller stated the seller was to pay a commission to the broker "on recordation of the deed or other evidence of title . . . ." An addendum to the contract provided that "real estate commission to be 6%, payable as follows: 50% in cash at close of escrow. . . ." (Chan, supra, 1 Cal.App.4th at p. 1581, fn. 3.)