Owing “Finder’s Fees” To Salespersons-Special Bulletin

A recent decision by the California Court of Appeals held that a Porsche Dealer may owe a finder’s fee to an unlicensed salesperson who is in the business of finding, buying, and then selling again used Porsches. The dealer argued that the saleperson lacked a dealer’s license and a salesperson’s license and therefore, was barred from recovering any finder’s fee (11 vehicles were at issue). The salesperson argued that he was a salesperson and that he should be able to recover against the dealer for breach of contract, unjust enrichment, and fraud. The lower court found on behalf of the dealer but the higher court reversed that decision finding that the salesperson was “in substance a salesperson” for the dealer. As for the fact that the salesperson also lacked a salesperson’s license, the court held that the licensing requirement exists to protect the public from unscrupulous dealers and not dealers from their own salespeople.

Take a hard look at your policies. This may open up a can of worms.