The clause "protects" the broker from collusion between sellers and buyers. It says if a buyer tries to go around the broker and go directly to the seller, the seller still owes a commission, providing the broker has followed procedure.
Generally, there is a time limitation entered on the contract in conjunction with this safety clause, which can vary between 3 days to 360 days after the listing has expired or is withdrawn.
If that clause is not checked on the listing agreement, then generally it does not apply. If the broker does not give written notice to the seller, then the broker has not followed procedure and will likely not be able to collect a commission. Contact a real estate lawyer for more advice.
At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.
Mr. Crowe was so upset that he canceled the transaction with Brad Pitt and suggested that Pitt move to San Diego or somewhere else equally as warm.