A Success Fee Clause With Two Bases Is Void in Cyprus

On 2 September 2026 the Supreme Court dismissed an appeal by a professional who had done the work, obtained an excellent result for the client, and then could not recover the fee he had agreed. The written fee term was held void, not because it was unfair, and not because the client proved anything against him, but because it named two different bases for calculating the same payment and never said which one governed.

The sum at stake was 29,250 euro. The appeal failed and he was ordered to pay a further 3,000 euro plus VAT in costs.

The case concerned a lawyer's retainer, but nothing in the reasoning is confined to lawyers. It applies to every clause that pays somebody a percentage of a figure that can be measured in more than one way, which in practice means most commission, incentive and success fee arrangements in use in Cyprus.

Who this hits

Anyone whose contract pays a percentage rather than a fixed sum, on either side of it:

• Agents, brokers and introducers earning commission on a sale, a lease or a funding round.
• Sellers and buyers of a business with an earn out measured on turnover, profit or collections.
• Contractors and project managers on incentive, savings share or target cost terms.
• Consultants and advisers paid on a result rather than on time.
• Companies paying bonuses calculated on profit, recoveries or debtor collections.

What the clause said

The client signed a special retainer on the appointment document. In translation, the operative words were that she would pay the actual expenses incurred and in addition ten cents for every one euro of the amount which would be awarded to her and/or on the value of the assets which she would receive.

That reads as one sentence. It contains two measurements.

The underlying matter, a property dispute in the Family Court in Paphos, settled by consent judgment on 10 March 2010. Under it she was awarded a house and two apartments with a combined value of 528,000 euro, plus 55,000 euro in cash, plus a vehicle of unknown value. What she actually received from her former husband was 10,000 euro in cash.

Read as the amount awarded to her, the clause measured 528,000 euro in property plus 55,000 euro in cash plus a vehicle of unknown value, and ten per cent of that came to 58,300 euro plus a share of the vehicle. Read as the value of the assets she would receive, it measured the 10,000 euro in cash she actually got, and ten per cent of that came to 1,000 euro.

The same clause, applied to the same outcome, produced a fee that differed by a factor of about fifty eight. That is what the court meant when it said the two limbs led to materially different economic results.

The rule the clause failed

Article 29 of the Contracts Law, Cap. 149, provides that agreements, the meaning of which is not certain, or capable of being made certain, are void.

The appeal court restated the working test. Where the essential terms of an agreement are clear, or can be ascertained from a reading of the text as a whole, the agreement is valid regardless of ambiguities in its detail. Validity depends on the precise determination of the essential terms, so that the court can construe the contract objectively rather than create one from the beginning. Where the interpretative exercise is impossible, the agreement is void.

The court found that the basis for calculating the fee was a core and essential part of the bargain, and that it was fundamentally unclear. The trial judge's approach was upheld in full.

It was not the and/or

This is the part most likely to be misreported, and the court addressed it expressly.

The ambiguity did not stem from the words and/or read in isolation. The trial court had not construed those words on their own, but together with the two limbs they connected. The reference to the amount which would be awarded pointed to legally adjudicated entitlements. The reference to the assets which she would receive pointed, on the ordinary meaning of the words, to actual collection.

Those two concepts are objectively distinct. The interpretative difficulty arose because two self standing and non identical bases of calculation were placed in relation to one another without it being made clear whether they were intended to operate cumulatively or alternatively, or which of the two prevailed. On that reasoning the connector was a symptom. Deleting it would not have saved the clause.

The court can raise this without being asked

The appellant's first ground was procedural and, on its face, strong: the client had never pleaded that the clause was unclear, so the trial court should not have decided the case on uncertainty.

It failed. The appeal court held that the interpretation of a written contract, and the assessment of the sufficiency and certainty of its terms, are par excellence questions of law which the court examines of its own motion. The client's pleaded case was that the agreement was invalid and not binding on her. Against that, establishing whether the terms were clear and certain was an inherent and inseparable element of the court's interpretative task. Uncertainty was therefore not a self standing factual allegation requiring specific pleading.

The practical consequence is uncomfortable for anyone holding a loosely drafted payment clause. You cannot rely on the other side failing to spot the problem. The judge is entitled to find it.

What this means in practice

A percentage payment clause needs four things stated, in the clause itself, in terms that admit of one reading only.

1. One base, named once. Decide whether the fee is measured on what is awarded, what is invoiced, what is collected, or what is retained after a stated set of deductions. Name that one thing. If two measurements genuinely apply to different situations, write them as separate clauses with separate triggers, not as alternatives inside one sentence.
2. What happens if the two diverge. Where a judgment, an award or an invoice is not paid in full, say expressly whether the fee follows the paper figure or the money. This is the precise gap that voided the clause here.
3. The trigger date and the mechanics. When does the entitlement arise, when is it payable, and against what document is it computed. A clause that is certain as to amount but silent as to event invites the same argument one stage later.
4. Non cash consideration. The vehicle of unknown value in this case is a small detail with a large lesson. If assets, shares or property can form part of the base, state how they are valued and by whom.

Before signing, apply one test to the clause: can two reasonable people, reading only these words, arrive at two different numbers? If they can, the clause is at risk, and the risk falls on the party relying on it to get paid.

Existing arrangements deserve the same read. A commission or incentive term agreed years ago and never tested is worth checking now, while it can still be varied by agreement, rather than after performance when the counterparty has every incentive to find the ambiguity. This is standard work on a contract review, and it sits alongside the wider corporate and commercial practice.

What to watch

The party who drafted the clause bears the commercial risk of its being void, and that party is usually the one expecting to be paid. A void clause does not convert into the more favourable of the two readings. It converts into nothing, and the person who did the work is left arguing a separate claim for reasonable remuneration which must be pleaded and proved in its own right. In this case that route did not rescue the claim.

Questions we are asked

Sources

• Polykarpos K. Philippou v. Andriana Lazari, Civil Appeal 217/2017, Supreme Court of Cyprus, 2 September 2026
• Contracts Law, Cap. 149, consolidated text, CyLaw

This article is provided for general information purposes only and does not constitute legal advice.

Klitos Platis

Advocate, Partner

Kleanthous & Platis LLC, Nicosia · Published 12 September 2026