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The principal may appoint more brokers. Those brokers may have
differing duties under the main brokerage agreement, or may be
appointed to act in concert with the existing broker(s).
There is no precedent form with respect to brokerage agreements
except for real estate brokerage agreements. However, having a written
form of brokerage agreements is important for the purposes of evi-
dence and future disputes. Real estate brokerage agreements, wherein
the broker connects the buyer/tenant and the lessor/seller of a certain
real estate, must be in writing. Provisions under the Code with regard
to representation shall apply to brokerage agreements.
Rights and Obligations of the Broker
In principal, brokers are entitled to a fee when the parties reach an
agreement, and upon the execution of the final and main agreement.
However, the principal and the broker may agree on the payment of a
fee (a portion or full payment thereof) even if the agreement is not exe-
cuted. If there is no agreement, the brokerage fee may be determined
according to the tariff, or upon private agreement, if there is no tariff
according to the practice. (Code Art. 522).
If the parties agree on the payment of the broker’s expenses as set
forth in the brokerage agreement, then the expenses of the broker shall
be paid, even if the main agreement is not executed and signed. In
practice, brokerage agreements determine the payment of the docu-
mented expenses of the brokers within a limited capped amount, and
for any overage expenses, the broker shall obtain the prior consent of
the principal.
The broker, in principal, shall fulfill his duties in person; however,
as per Article 507 of the Code, he may delegate his duties to a third
person; in such case, he shall be responsible for the acts of such third
person.
The broker shall report to the principal with regard to his actions,
and act in accordance with the instructions given by the principal. The
broker shall be loyal, and shall fulfill the duty of care. In the case of a
breach of his duty of care, he may forfeit his right to claim the payment
of the fee. As per Article 23 of the Code, if the broker acts in favor of
the counterparty and not the principal, in breach of his duty, or acts
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