Legal Updates

A middleman need prove being the effective agent for the transaction itself and not only to have brought about an idea for a possible transaction in the field

February 28, 2018

A businessman tried to interest an international pharmaceutical company in the possibility of cooperating with a Russian businessman to set up a pharmaceutical factory in Russia. No middleman agreement or joint venture agreement was signed, but many months later the pharmaceutical company decided to set up a factory elsewhere in Russia, and the businessman claimed entitlement to finders fees because arguing that he brought the pharmaceutical company the idea of setting up a pharmaceutical plant in Russia.
The Court held that the law does not require a particular form of agreement but is required to show that there was an intention to create legal relations, i.e, proof of the parties' intent and specificity of the terms of the agreement. Here the businessman raised the subject of the commission he is asking for but was replied that at the time it is not known whether the prospective transaction will advance and therefore the issue of payment will be discussed in the future. In addition, even if a middleman agreement was entered into, a middleman need show that he was the efficient agent for creating the transaction. Here, the businessman tried to promote a transaction with his Russian acquaintance, but the pharmaceutical company eventually set up a factory in another location in Russia. The mere idea of setting up a pharmaceutical factory in Russia is not enough to be an effective factor.