BROKERAGE AGREEMENT

Elements – Content – Model – Synopsis

By José María Pacori Cari

Professor of Law at the UJCM – Peru

Member of the Argentine Association of Administrative Law

AREA: COMMERCIAL LAW

LINE: COMMERCIAL CONTRACTING

I.- WHAT IS THE BROKERAGE AGREEMENT?

The brokerage contract is the contract by which a person instructs another person (broker) to
inform him or her of the occasion or opportunity to conclude a legal transaction with a third
party or to serve as an intermediary in this conclusion, taking the appropriate steps to obtain the
agreement of wills aimed at its realization in exchange for a commission or fee.

II.- ELEMENTS OF THE BROKERAGE AGREEMENT

1.- Personal elements

The parties to a brokerage contract are the INTERMEDIATE (proposer, offeror) and the
BROKER, both of whom must have the general capacity to contract and be bound. The broker
can be a natural or legal person.

2.- Objective elements

The INTERMEDIATION SERVICE and the COMMISSION PRIZE are objective elements of this
contract. The relationship of these elements is causal, since the perfection of the business
intended by the offeror must have its cause in the mediation activity carried out by the broker. It
is necessary that the contract takes place as a consequence of the broker's actions.

3.- Formal elements

This contract is not subject to a special form, it can be done by phone, and it is recommended
that it be done in writing.

III.-CONTENT OF THE CONTRACT

1.- Runner's obligations

 The broker is obliged to carry out its management in accordance with what is stipulated
and in good faith.
 The broker is obliged to connect those who may be contracting parties, ceasing his
function once he establishes a relationship with the parties, who are the ones who must
conclude the future and final legal transaction.

2.- Obligations of the intermediary

2.1.- About the broker's fees:

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The INTERMEDIATE is obliged to pay the commission in the event that the brokerage contract is
perfected, by virtue of the broker's management. The following can be indicated in the contract:

 The broker will only collect his fees when the main business has been consummated.
 The broker will collect his fees regardless of whether he perfects the main business.
 The broker will only collect his fees when the main business is carried out.

2.2.- About the runner's expenses :

Regardless of the commission to be received, the broker will charge the expenses that his
intermediation has caused, unless otherwise agreed.

IV.- EXCLUSIVITY AGREEMENT

If the legal transaction is perfected outside of the broker's management, the broker will not have
the right to accrual of the agreed fees, but, where appropriate, would have the right to eventual
compensation for any damages that the management carried out has generated.

V.- EXTINCTION

In addition to the general causes, contractual termination will take place due to unilateral
withdrawal of any of the parties, without the obligation to compensate, unless there has been
bad faith. If, despite the withdrawal, the INTERMEDIATE concludes the legal transaction taking
advantage of the procedures previously carried out by the broker, the latter may demand all of
its fees.

VI.- REAL ESTATE AGENT IN ADMINISTRATIVE LAW

Although the brokerage contract is a figure of Commercial Law, we can find a regulation of
Administrative Law. Although nothing is indicated about the brokerage contract, we can
establish, based on theory, the regulation of this contract in the case of real estate. In Peru, Law
29080 – Law creating the Real Estate Agent Registry of the Ministry of Housing, Construction
and Sanitation – regulates relations regarding the real estate brokerage contract without
expressly mentioning it. Even this Law is regulated through Supreme Law 004-2008-VIVIENDA
by which “Regulations of Law 29080 – Law of Creation of the Real Estate Agent Registry – are
approved.” However, you should keep in mind that the brokerage contract is not limited to real
estate, but extends to insurance brokers, stock brokers, and agricultural products brokers.

VII.- BROKERAGE CONTRACT MODEL

Based on essential aspects of this contract, the following basic brokerage contract model is
offered:

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 BROKERAGE AGREEMENT
This document establishes the brokerage contract […], entered into by one party […], identified with RUC
[…], with registration entry […] of the Registry of Legal Entities of […], with address at [… ], duly
represented by its Manager [...], identified with DNI [...], with powers registered in the seat [...], who from
now on will be called THE BROKER; and, on the other hand, […], identified with DNI […], domiciled in […],
who from now on will be called the INTERMEDIATE, in accordance with the following clauses:
BACKGROUND
FIRST.- THE INTERMEDIATE is the owner of […], establishing that said property has no encumbrance,
judicial or extrajudicial measure, act or contract that limits its free availability.
SECOND .- The BROKER is a legal entity governed by private law, whose main activity is intermediation in
the execution of […] contracts.
OBJECT OF THE CONTRACT
THIRD.- The BROKER undertakes to promote […] for a period of […]; In consideration, the INTERMEDIATE
agrees to pay the BROKER a commission or fee that will be deducted from the sale price of […]
BROKER OBLIGATIONS
FOURTH.- The BROKER undertakes to:
1.- Inform the INTERMEDIATE and propose the draft contract for the […]
2.- You must advertise on your own, notices advertising the […] in newspapers, posters and any other
mass media.
3.- You must provide potential interested parties in […], all the information they require such as […], which
you will obtain directly from the INTERMEDIATE.
OBLIGATIONS OF THE INTERMEDIATE
FIFTH.- The INTERMEDIATE undertakes to:
1.-Pay to the BROKER a commission amounting to […]% of the price of the sale of […], if the operation is
carried out, said payment will be made at the time of signing the […] contract.
2.- You are obliged to refrain from offering the sale of […] while the contract is in force, in case of non-
compliance you are obliged to pay the BROKER the established commission.
3.-It is obligated to provide all the facilities so that the CORRIDOR fulfills the entrusted work.
EXPENSES AND TAXES
SIXTH.- The parties agree that all expenses and taxes arising from the celebration, formalization and
execution of this contract will be assumed by the INTERMEDIATE.
CONTRACT TERMINATION
SEVENTH.- Failure to comply with the obligation assumed by the BROKER will constitute grounds for
termination of this contract. The resolution will occur by operation of law when the INTERMEDIATE
informs the BROKER that he wants to avail himself of this clause, by notarial letter.
REFEREE COMPETITION
EIGHTH.- Any disputes that may arise regarding this contract will be submitted to arbitration.
HOME
NINTH. - For the validity of all communications and notifications to the parties, regarding this contract,
both indicate as their respective addresses those indicated in the introduction of this document. The
change of address will take effect as soon as it is communicated by notarial means.
SUPPLEMENTARY APPLICATION OF THE LAW
TENTH.- In everything not provided for by the parties in this contract, both are subject to the provisions of
the Civil Code and other applicable regulations.
As a sign of agreement, the parties sign this document in the city of […], on […] days of the month of […]
of […].

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