Legal Definitions - double commission

A double commission refers to a situation where an agent, broker, or intermediary receives two separate payments (commissions) for facilitating a single transaction or service, often from different parties involved in that same transaction. This practice can raise ethical and legal concerns, particularly regarding conflicts of interest and fiduciary duties, if not fully disclosed to and agreed upon by all parties.

Here are some examples:

• Real Estate Transaction: Imagine a real estate agent who is hired by a seller to list their house. During the process, the agent also finds a buyer who is unrepresented and agrees to help them with the purchase. If the agent then attempts to collect a commission from the seller for selling the house *and* simultaneously collects a separate commission from the buyer for assisting them with the purchase, without full disclosure and explicit consent from both parties, this would constitute a double commission.

  This illustrates a double commission because the agent is receiving two distinct payments for facilitating a single property sale, potentially creating a conflict of interest as their loyalty might be divided between the seller's desire for a high price and the buyer's desire for a low price.

• Financial Advisory Services: Consider a financial advisor who recommends a particular investment fund to a client. The client pays the advisor a fee for their financial planning and advice. Unbeknownst to the client, the advisor also receives a separate "finder's fee" or commission directly from the investment fund company for every client they steer towards that specific fund.

  This is an example of a double commission because the advisor is being compensated twice for essentially the same service – guiding the client to a specific investment product – once by the client and once by the product provider. This undisclosed arrangement could influence the advisor's recommendations, potentially not acting solely in the client's best interest.

• Business Consulting and Procurement: A consultant is hired by a small business to help them select and implement a new customer relationship management (CRM) software system. The business pays the consultant a flat fee for their expert advice and project management. However, the consultant also has a secret agreement with one of the CRM software vendors, receiving a percentage of the sale price for every client they refer to that vendor.

  This scenario demonstrates a double commission because the consultant is earning revenue from two sources for the same procurement activity: a direct fee from the client for their unbiased advice and a hidden commission from the software vendor. This undisclosed payment from the vendor could compromise the consultant's objectivity in recommending the best software solution for the client.