Mark Pestronk
Q: My agency arranged travel for a corporation's annual conference at a large U.S. chain hotel. We negotiated the hotel contract, which stated that we were the agent for the corporation and were entitled to 10% commission on the paid-for and occupied rooms. Soon after the hotel contract was signed, the corporation told us that we were no longer needed and that it would do all the other travel and meeting arrangements in-house. Unbeknownst to us, the hotel and the corporation then agreed to give the corporation a 10% discount on the rooms instead of paying us a commission. When we demanded the commission, the hotel refused to pay, on the grounds that it had already given the equivalent of the commission to the corporation. The corporation also refused to help us, on the grounds that we allegedly did not do the work promised in the contract between our agency and the corporation. Do we have a case against the hotel and/or the corporation?
A: The hotel's position has no legal basis and provides no defense to your claim. Therefore, you could successfully sue the hotel for the commission.
The corporation conspired with the hotel to deprive you of the commission. Therefore, you could also successfully sue the corporation instead of, or even in addition to, the hotel.
These companies' behavior was despicable, and their legal positions now are ridiculous. Unfortunately, such behavior is also probably common in the travel industry.
Since commercial litigation is so expensive that your legal fees could exceed the commission, and since you probably could not recover those fees from the losing party, it would certainly be better to settle this case before litigation.
Your case against the hotel would be based on breach of contract, so it would be easier to prove, which means that you should start with the hotel.
Since your agency is not a party to the contract in question, you would base your claim on being a "third-party beneficiary," which means a nonparty that can sue for the benefit in the contract when the parties intended to confer that benefit.
Even without being named in the contract, you are entitled to the commission from the hotel on the grounds that your work was the "procuring cause" of the sale. Even if all it took was one phone call to get the contract that the corporation accepted, your entitlement to an industry-standard commission of 10% is unquestionable.
The procuring-cause doctrine holds that "an agent is entitled to a commission when he brings the minds of the parties together, in that he has procured a buyer ready, willing and able to purchase on the seller's terms and conditions." This is exactly what you did.
Whether the hotel has already provided the equivalent of a commission to the corporation is also irrelevant. Whether you did the work under your contract with the corporation is also irrelevant to your commission claim, as the hotel is not a party to your contract with the corporation.
You may need an attorney to make the hotel understand that you are entitled to the commission and would sue if necessary.