What Is A Conjunction Agreement?

If you work in real estate or sales, you’ve probably heard the term “conjunction” tossed around when two agencies or sales partners team up on a deal.

A Conjunction Agreement is the contract that makes that collaboration clear and enforceable. It sets out who does what, how the commission is split, and when each party gets paid - so you can focus on winning the deal without arguments later.

In this guide, we’ll explain what a Conjunction Agreement is in Australia, when to use one, the key clauses to include, how it interacts with agency and consumer laws, and how to put one in place the right way.

What Is A Conjunction Agreement In Australia?

A Conjunction Agreement is a written contract between two (or more) agents or businesses who agree to work together on a specific listing or opportunity and share the commission or fee if it settles.

You’ll most often see them in property sales and leasing, but they’re also used in other industries where multiple intermediaries help bring a deal together.

In a typical real estate scenario, one agency holds the authority from the vendor (the principal) and another agency introduces a buyer. The Conjunction Agreement records how the commission will be split between those agencies and the conditions for payment.

Because it governs how agents act for, or alongside, a principal, it sits alongside the law of agency. If you’re brushing up on how the agency-principal relationship works in real estate, it’s helpful context for understanding conjunctions.

When Should You Use A Conjunction Agreement?

Use a Conjunction Agreement any time two parties are collaborating on the same opportunity and want clarity around commission or referral fees. Common examples include:

• Real estate sales: the listing agent teams up with a buyer’s agent who introduces a purchaser.
• Leasing: a managing agent partners with another agent to place a tenant.
• Project marketing: multiple agencies promoting stock for the same developer.
• Specialised introductions: an agent engages a local or niche agency to access their database.

If your role is purely to introduce a client and step back, sometimes a straightforward Referral Agreement is enough. But if both parties are actively working the listing or negotiating the deal, a purpose-built Conjunction Agreement is usually the better fit.

In many cases, your engagement with the principal should also be covered by a separate Real Estate Agent Agreement. The Conjunction Agreement then manages the relationship between agents.

What Terms Should A Conjunction Agreement Include?

The right clauses up front save disputes later. Consider covering these essentials.

1) Parties, Scope And Authority

• Parties: clearly identify each agency (legal names and ABNs).
• Scope: define the property, project or opportunity the conjunction covers.
• Authority: confirm which agent holds the vendor authority and any limits on the other party’s role (e.g. introducing buyers only, or also handling inspections/negotiations).

2) Commission Structure And Payment Triggers

• Split: the exact percentage or dollar split of the commission (e.g. 50/50 or 60/40).
• Trigger: when payment is earned and payable (usually on settlement, sometimes exchange for leasing).
• GST: whether amounts are inclusive or exclusive of GST.
• Who pays: usually the listing agent collects from the principal and remits the agreed share.

3) Causation, Introductions And Client Lists

• Effective cause: wording to prevent double claims by tying payment to being the effective cause of the sale or lease.
• Introductions: process for recording buyer introductions (e.g. email log) and any protection period if the introduced party later transacts.
• Exclusions: an initial list of known prospects, project marketing allocations, or pre-registered buyers.

4) Conduct, Marketing And Costs

• Conduct standards: compliance with law, professional conduct and licensing requirements.
• Marketing: what channels each party can use, branding, and who approves materials.
• Expenses: which costs are shared or absorbed (e.g. ads, staging, auctioneer fees), and approval thresholds.

5) Exclusivity, Territory And Term

• Exclusivity: whether the conjunction is exclusive between the parties, or you can partner with others.
• Territory: geographic or channel limits, if relevant.
• Term: start date, end date and any holdover/intro protection period after expiry.

6) Confidentiality And Data

• Confidentiality: restrict use of vendor/buyer information to the purpose of the conjunction.
• Data handling: expectations around storing and sharing enquiry data, and compliance with privacy obligations.

If you’ll exchange sensitive information before agreeing terms, a short Non-Disclosure Agreement can help protect client lists and strategy.

7) Dispute Resolution, Liability And Insurance

• Dispute process: good faith negotiations, escalation and optional mediation before litigation.
• Indemnities: each party is responsible for its own breaches or misrepresentations.
• Insurance: confirm minimum public liability and professional indemnity cover.

8) Termination And Post-Term Clauses

• Termination rights: for convenience (with notice) and for cause (serious breach).
• Survival: clauses that continue after termination (confidentiality, payment obligations, dispute process).
• Restraints: limited, reasonable restraints to prevent poaching the other party’s staff or misusing client lists.

9) Boilerplate And Execution

• Entire agreement, notices, assignment restrictions and governing law (state/territory).
• Clear execution blocks for companies or individuals, and whether the agreement is a deed or simple contract.

Many conjunctions also include a simple side letter or Commission Agreement to confirm the split for a specific deal ID or lot, which can reduce admin where the parties work together often.

How Do Conjunction Agreements Interact With Agency And Consumer Laws?

Even with a solid contract, your conduct must still comply with broader laws. Key areas to keep in mind:

Agency Law And Licensing

If you’re acting on behalf of a principal, agency law applies. Make sure the vendor’s authority allows you to engage another agent, or get written consent. Each agent must hold the appropriate licence in that state or territory.

Clear delegation in the Conjunction Agreement helps avoid disputes about who can make representations and who can bind the principal.

Australian Consumer Law (ACL)

Real estate advertising and negotiations are subject to the Australian Consumer Law, including the prohibitions on misleading or deceptive conduct. Ensure your marketing and conduct align with these obligations to avoid penalties and commission disputes. If you want a refresher, have a look at section 18 on misleading conduct under the ACL and keep your team’s statements consistent with the facts: Section 18 ACL.

Unfair contract terms rules can also be relevant to standard form agreements. If you use template clauses across many deals, consider a periodic UCT review and redraft so your terms remain compliant.

Duties To The Principal

Agents owe duties to act in the principal’s best interests, follow instructions and avoid conflicts. Your Conjunction Agreement should support - not undermine - those duties. For instance, if leads are shared, define when information must be passed to the listing agent so the principal receives timely updates and fair opportunities.

Record-Keeping And Payment Integrity

Keep clean records of introductions, inspections, offers and communications. Accurate logs reduce arguments about “effective cause” later and help you resolve any commission queries quickly. Where a dispute does arise, a well-drafted settlement pathway can save time; in stubborn cases, a Deed of Settlement may be used to document the resolution.

Step-By-Step: How To Put A Conjunction Agreement In Place

Step 1: Confirm Authority And Vendor Consent

First, check the listing authority and any agency appointment documents. If they don’t expressly allow conjunctions or sub-agency, seek the principal’s consent in writing.

Step 2: Align On Commercial Heads Of Terms

Agree on the basics upfront: commission split, deal scope, term, introductions process, and who will lead negotiations. A short term sheet or email confirmation keeps everyone on the same page before drafting.

Step 3: Put The Agreement In Writing

Prepare a clear, tailored Conjunction Agreement that reflects your heads of terms and includes the key clauses above. If you’re collaborating repeatedly, you can create a master agreement and issue countersigned deal schedules for each new listing.

If you are operating through companies, ensure the execution blocks are correct and signatures are from authorised officers. For more context on signing rules and witnessing, this explainer on legal requirements for signing documents is handy.

Step 4: Coordinate Marketing And Communications

Share approved assets, set response time expectations and log buyer introductions in a consistent format. Decide early who will host open homes, manage offers and report to the vendor.

Step 5: Keep A Solid Paper Trail

Record every introduction, inspection, offer and key discussion. Save emails and SMS threads in a shared folder. This evidence will support “effective cause” if needed.

Step 6: Invoice And Settle The Split

When the trigger event occurs (exchange, settlement or lease commencement), raise tax invoices that match the contract wording (including GST where applicable). The collecting agent should remit the agreed share promptly and provide remittance advice.

Common Pitfalls (And How To Avoid Them)

We see the same issues pop up - luckily, they’re preventable.

• Verbal arrangements: a handshake deal feels quick, but it leaves too much to interpretation. Always document the split and scope.
• Vague causation: without a defined “effective cause” test and an intro log process, both sides may claim the same buyer. Build clear rules into the agreement.
• No vendor consent: if the listing authority doesn’t allow conjunctions and the vendor objects later, commission can be at risk. Get consent first.
• Conflicting exclusivity: if both parties assume exclusivity, you can end up in conflict. State plainly whether either party can collaborate elsewhere.
• Marketing confusion: brand misalignment or unapproved claims can breach the ACL and sour the vendor relationship. Align on messaging and approvals at the start.
• Unclear expense sharing: disputes over ads and collateral add up. Specify which expenses are shared and require pre-approval over a threshold.
• Missing signatures or wrong entity names: administrative slips make enforcement harder. Double-check names, ABNs and execution.

It’s also important to separate the principal’s commission obligation from the agent-to-agent split. Your Conjunction Agreement should make clear that inter-agent payments don’t change what the vendor owes under the listing agreement.

What Legal Documents Will Help?

Depending on how you collaborate, consider these documents (not every deal will need all of them):

• Conjunction Agreement: governs the relationship between collaborating agents, including scope, commission split, conduct and payment triggers. A tailored Conjunction Agreement clarifies roles and reduces risk.
• Real Estate Agent Agreement: sets the terms between the listing agent and the principal (vendor/landlord), distinct from the conjunction between agents. See Real Estate Agent Agreement.
• Commission Agreement: a simple record of the commission split for a particular transaction or lot, useful alongside a master conjunction. Explore a Commission Agreement.
• Non-Disclosure Agreement (NDA): protects sensitive information (client lists, pricing strategies) shared while exploring a conjunction. A standard NDA is quick to implement.
• Referral Agreement: if one party simply makes an introduction and steps back, a Referral Agreement may be more suitable than a full conjunction.
• Deed Of Settlement: if a dispute does arise, a Deed of Settlement documents the resolution and releases claims.

Finally, if you rely on standard templates, it’s wise to have them reviewed periodically for compliance with unfair contract terms and consumer law - a pragmatic way to stay ahead of regulatory updates is a UCT review and redraft.

Key Takeaways

• A Conjunction Agreement is a contract between collaborating agents that sets out roles, commission splits and payment triggers for a specific deal.
• Use one when two agencies will work together on the same listing or opportunity; if it’s just a one-off introduction, a Referral Agreement may suffice.
• Essential clauses include authority and scope, commission mechanics, introductions and “effective cause”, marketing conduct, costs, confidentiality, dispute resolution and termination.
• Conjunctions operate alongside agency duties and the Australian Consumer Law, so align your conduct and marketing with those obligations and keep proper records.
• Follow a simple process: confirm vendor consent, agree commercial terms, document the agreement, coordinate marketing and introductions, and settle the commission split promptly.
• Templates are a great start, but tailoring your Conjunction Agreement to the deal - and keeping it ACL/UCT compliant - helps prevent costly disputes.

If you’d like a consultation or a fixed-fee Conjunction Agreement drafted for your next listing, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.