The Doctrine Of Procuring Cause Determines Whether A Broker, A Sales Rep., or An Agent Is Entitled To A Commission Under Delaware Law
When there’s a dispute as to whether a broker has earned a commission, in Delaware (like many other states), the general rule is that a broker is entitled to recover a commission only when he is the procuring cause of a consummated transaction. A broker is the “procuring cause” of a sale if his efforts bring his principal and the purchaser together and lead directly to the consummation of the transaction.
In cases where the negotiations do not progress promptly to a conclusion, but, after considerable delay, are finally satisfactorily concluded between the principal and the purchaser, close questions arise. In such cases, the courts have evolved a subsidiary rule that in order for the broker to be the procuring cause of the sale, it must appear that there was no substantial break in the negotiations. Whether there was a substantial break in the negotiations depends not so much on lapse of time as upon the chain of circumstances.
A principal has the privilege of taking over the negotiations from his agent, after introduction of the prospect, and acting on his own behalf in the consummation of the transaction. Such substitution by the principal of himself for his agent, per se, does not amount to a dismissal of the broker. And the action of the principal in so doing does not become an intervening or predominant cause such as will constitute a break in the chain of causation that, otherwise, would "lead directly" from introduction to consummation and constitute procuring cause.
There are two exceptions to the general rule.
(1) if, after producing the prospect, the broker was dismissed by his principal in bad faith as a device to avoid the commission.
(2) if a broker produces a prospect ready, willing, and able to meet his principal's expressed terms, the commission is earned regardless of whether or not the transaction is thereafter consummated. and this is so even though the principal may thereafter withdraw the broker's authority and dismiss him.
