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Let’s say you’re a real estate agent with an obligation to sell a property to someone. However, at one point, you appoint another real estate agent to take over this responsibility of sale for you.
This is what we know as a Conjunction Agreement.
Put simply, it’s a transfer of responsibility from one agent to another. But, of course, there are some other key details around the arrangement that are worth knowing – read on to find out more.
How Does A Conjunction Agreement Work?
A Conjunction Agreement essentially allows one agent to transfer their obligation to sell a property to another agent. So, instead of selling the property yourself as originally planned, you authorise another agent to undertake the sale on your behalf.
However, it requires that the earnings from that sale are distributed between the two agents. In other words, both the first and second agent will receive a portion of the overall commission made from the sale. The amount received by each agent will depend on what the agreement stipulates, so it’s important to have clear discussions about your preferences prior to entering into the agreement.
How Do You Enforce A Conjunction Agreement?
Conjunction Agreements have been a topic of discussion for Australian courts over recent years. Although the agreements are drafted to be unambiguous, disagreements and misunderstandings can still arise, sometimes resulting in litigation.
So, how exactly is a Conjunction Agreement enforced? How do you know if a Conjunction Agreement arises in your situation?
To better understand how this works, let’s have a closer look at the case of Equity 2 Pty Ltd v Best Price Real Estate Pty Ltd.
Equity 2 Pty Ltd v Best Price Real Estate Pty Ltd [2020]
In this case, the first agent transferred the obligation to sell land to another agent. This second agent then initiated legal action against the first agent, arguing they were entitled to a percentage of the commission made from the sale. The Court found that no such Conjunction Agreement existed between the parties. This was justified on the grounds that the contract itself was clear. The agreement to sell the land was the first contract between the initial agent and the buyer, and when the buyer subsequently purchased the land from another agent, this gave rise to a separate contract. This landmark decision continues to be referenced in modern legal proceedings as a reminder of the importance of clear contractual terms, even in 2025.
The case also highlighted that where a contract is sufficiently explicit, a party cannot rely on ‘implied terms’ to argue the existence of a Conjunction Agreement. Furthermore, the first agent did not act in breach of their duty of good faith.
What Does This Mean For Agents?
As noted, this case demonstrates that the clarity of the contract will outweigh any claims based on ‘implied terms’. When entering into arrangements as an agent, it’s essential to ensure that your contract terms are unequivocal, as these will be scrutinised closely in any potential legal proceedings.
It will determine whether or not a Conjunction Agreement is deemed to exist and, consequently, whether a party will be entitled to a portion of the commission received from the relevant sale.
In 2025, it’s more critical than ever for agents to adopt robust digital solutions in managing their contracts and commission splits. Many agencies now use integrated digital platforms that not only streamline the negotiation process but also automatically track commission distribution. This technological advancement, combined with the widespread use of legally recognised e‐signatures, minimises the risk of disputes over implied terms. For further clarity on drafting bulletproof agreements, our Contract Review and Redraft service offers up-to-date guidance tailored for today’s real estate market. For further guidance on best practices in contracting, check out our article on What is a Contract?.
What Does A Conjunction Agreement Include?
A Conjunction Agreement will generally outline the transfer of the obligation to sell property to another party. However, it should also include:
- The nature of services to be provided
- Information about fees and commissions
- Extent of authority to act on behalf of a client
Make sure the terms of the contract are clear between all parties to avoid any confusion or misunderstandings later down the track.
Where Can I Get A Conjunction Agreement?
If you’re an agent and you need legal help with a Conjunction Agreement, our lawyers offer a Conjunction Agreement package which includes the following:
- Drafting a Conjunction Agreement in accordance with the requirements of your business
- Phone consultations with a Sprintlaw lawyer who can answer your legal questions
- A complimentary amendment to the final draft we provide you
Key Takeaways
If you’re a real estate agent, it’s crucial that you have your terms clearly set out in writing. This way, you can avoid any issues around commission payments and disputes between parties.
If you need any help, our expert lawyers are always ready to chat. We also offer assistance with a range of legal matters including Commercial Leases, Contracts, Intellectual Property, Franchising, Data & Privacy, Employment Law and Startups.
If you’d like a consultation on your options going forward, you can reach out to our legal consultants at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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