Exclusive Listing and 90-Day Tail Clause After Private Sale
Plains Auction Co. signs a 30-day exclusive-right-to-sell listing with owner Dana for a 1957 pickup. Commission is 10% if the truck sells during the term or within 90 days to a person who 'attended or was registered at' the auction. Dana cancels on day 10. Two weeks later, Dana sells the truck privately to Luis for $48,000. Luis had walked through the auction preview but did not register or bid; he says he saw the truck on Plains' website. Plains demands $4,800. Dana says the tail clause is an unenforceable penalty because Luis never bid.
1. Is Plains entitled to the commission? Analyze the exclusive listing, the tail clause, and causation.
Read the worked answer
Plains' claim depends on the listing language and proof. An exclusive-right-to-sell clause can entitle the broker to a commission even if the owner sells during the term, because the owner gave Plains the right to sell. But the private sale occurred after Dana cancelled, so Plains must rely on the 90-day tail. A tail clause is enforceable if it is reasonable in time and scope and identifies the protected buyers. 'Attended or was registered' is broad; if Luis merely walked through a public preview, Plains may struggle to show he was a protected prospect or that Plains procured him. Website viewing may not equal attendance. Plains must show Luis was within the clause and that the clause was disclosed. A 10% commission on $48,000 is $4,800; that is not automatically a penalty, but a court may decline to enforce an overbroad tail. If Dana cancelled without proper notice, Plains may also claim breach of the exclusive listing.
2. What documentation should Plains have kept, and how should it respond to Dana?
Read the worked answer
Plains should assemble the signed listing, cancellation notice, attendance logs, registration lists, website analytics, preview sign-in sheets, and any communications with Luis. It should send a written demand explaining the clause and the evidence, not a bare invoice. If the records do not place Luis at the auction or in the protected class, Plains should not assert the commission; instead it can negotiate a reduced fee or release. If Dana's cancellation breached the exclusive term, Plains can claim damages for that breach separately. Good records and a measured demand preserve credibility.
3. Draft a better tail clause.
Read the worked answer
A better tail clause would identify protected buyers by name or by registration or bidder number, limit the tail to 60 to 90 days, and require written notice of the protected list within a few days after the auction. It should state that commission is due only if the auctioneer procured the buyer and the sale closes. It should also address cancellation, withdrawal, and dispute resolution. This reduces penalty arguments and makes the commission claim provable.