Legal Profession Act Agents Preparing Contracts

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Much confusion has arisen recently in relation to the interpretation of Section 24 of the Legal Profession Act and whether or not that particular Section bans Real Estate Agents from completing contracts.

Section 24(1) of the Legal Profession Act provides that a person must not engage in legal practice in Queensland unless that person is an Australia Legal Practitioner.

Section 24(2)(e) of the Legal Profession Act states that Section 24(1) does not apply to “work performed by a PAMDA Licensee, or by an employee of a PAMDA Licensee, if the Licensee or employee only fills in details in a pre-printed contract or other document as part of performing the work of a PAMDA Licensee and does not give advice about the contract or other document or the details that are filled in.” It has been suggested that the proper interpretation of these sections of the Legal Profession Act results in agents not being able to complete contracts.

Arguably these provisions affect the long established practice of agents preparing contracts under instruction from buyers and sellers. There is no clear statutory wording in the Legal Profession Act that specifically prohibits agents from completing pre-printed contracts. A commercial and common sense construction of the legislation would allow agents to continue preparation of contracts in the pre-printed format, including the addition of special conditions which are anticipated in the pre-printed forms.

It is very important however that agents exercise caution and not provide any legal advice as to the meaning or effect of any terms in the contract, whether standard terms or special conditions. As a matter of course, agents should recommend that clients seek legal advice prior to executing any contract.

Unfortunately there are no Court cases to test this particular provision of the legislation.  It is however r understanding that this legislation will be reviewed in the near future to provide some clarification.

My suggestion for the ongoing conduct of agents in their business is as follows:

  1. Continue to prepare contracts on behalf of clients provided that the contracts prepare are only in pre-printed form, such as the REIQ or ADL form contracts;
  1. Do not prepare any contracts that are not in a pre-printed form; and
  1. Definitely do not provide any legal advice about the contract or other documentation that is filled in by the agent.

Please contact Byron Cannon, Tony Pattinson or Tom Wood at  Ferguson Cannon if you would like to discuss any of the information provided above.

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Category: Business & Corporate Services, Fact Finders, General, Legal Profession Act, Property Development

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