Chapter 6: Real Property Transactions and Agency Law Flashcards
In which of the following examples is the licensee in breach of agency obligations?
1.) Tara was asked by Jim to sell his car while he was out of the country on an extended trip. She was to receive 10% of whatever price she could get. Tara had to go away for two weeks so she left the car with her mother with full instructions on what to do. Tara’s mother sold the car the first week Tara was away.
2.) Samantha had a listing on Wilbert’s house. Wilbert thought that his house was worth a small fortune and told Samantha not to bring any prospective purchasers through the house unless they provided a cheque for $10,000 first. Samantha knew that Wilbert was kidding himself about the quality of his house so she did not require purchasers to provide the cheque.
3.) Lisbeth was the listing agent of Paula’s house. Homer wanted to make an offer on Paula’s house and Lisbeth wrote it up. The price was to be adjusted by the cost of relocating a staircase, which the parties had discussed as hosting in the range of $4,000 - $6,000. The clause read: “Vendor to bear the cost of relocation of the stairway”. When the actual bids for the work came in they were all above $15,000.
4.) The agent has breached her obligations in all of the above examples.
4.) The agent has breached her obligations in all of the above examples.
Mike wanted to purchase a ten acre waterfront lot on Saltspring Island from Janice. He intended to subdivide the lot into ten 1-acre parcels and to sell nine of the resulting lots to finance the construction of a vacation home for his family on the remaining lot. In order to protect himself, he made the contract subject to his receiving approval of the subdivision plans from the Island Trust, one of the Gulf Island approving authorities. Mike later found another ten acre parcel which he preferred, and because he had not yet applied for the approval of the subdivision from the Island Trust, he decided to delay applying for the subdivision in order to use the condition precedent to avoid purchasing Janice’s lot.
Which of the following is TRUE?
1.) Because the contract of purchase and sale between Mike and Janice did not contain a promise that Mike would use his best efforts to satisfy the condition, Mike can successfully use the condition precedent to avoid purchasing Janice’s lot.
2.) Fulfilment of the condition precedent can be waived by Janice so that the approval of the subdivision is not necessary in order for her to ensure that the transactions completes.
3.) If Mike changes his mind and waives the fulfilment of the condition precedent requiring that he receive the Island Trust’s approval, he may be still liable to Janice for any increased construction costs caused by his delay in obtaining subdivision approval.
4.) Mike is under and implied obligation to use his best efforts to secure performance of the condition, and therefore Mike cannot use the condition to avoid the contract unless he has failed after using his best efforts to obtain subdivision approval.
4.) Mike is under and implied obligation to use his best efforts to secure performance of the condition, and therefore Mike cannot use the condition to avoid the contract unless he has failed after using his best efforts to obtain subdivision approval.
Mr. Burns listed his house for sale with Lisa. Murphy viewed the house and made an offer at $20,000 less than the list price. When he was talking with Lisa, Murphy told Lisa that his aged mother lived one block away and that he had to be in the neighbourhood to care for her. Murphy told Lisa that he had been looking in the neighbourhood for one year and Mr. Burns’ house was the first one that had been suitable. He said “Boy, this house is worth a fortune to me!” Lisa presented the otter to Mr. Burns without any explanation and Mr. Burns accepted it. Which of the following statements is TRUE?
1.) Lisa owes a duty of fairness to all persons with whom she deals and this means that she must treat information such as that she received from Murphy as confidential and she cannot communicate it to anyone without Murphy’s permission.
2.) Since there is no profit to Lisa in the situation apart from her commission, she has done nothing wrong in relation to Mr. Burns.
3.) By not informing Mr. Burns of Murphy’s special desire to buy in his neighbourhood, Lisa may have breached her obligation to disclose all material information, since Mr. Burns may have decided to make a higher counter offer if he had known Murphy’s eagerness to buy.
4.) Lisa had no obligation to tell Mr. Burns what Murphy’s plans were since Lisa was not selling her own property in the transation.
3.) By not informing Mr. Burns of Murphy’s special desire to buy in his neighbourhood, Lisa may have breached her obligation to disclose all material information, since Mr. Burns may have decided to make a higher counter offer if he had known Murphy’s eagerness to buy.
Tibor asks Victor to sell his lawn mower and power pruning and edging tools for him. When Magda comes to see the tools, she asks to take the lawnmower to a shop to have it checked. Victor allows her to do so. What is the nature of Victor’s authority?
1.) Victor has express authority to sell the mover and tools and no authority to allow Magda to remove the mower from the premises.
2.) Victor has express authority to sell the mover and tolls and to allow Magda to have the mower inspected.
3.) Victor has usual authority to sell the mower and tools and implied authority to allow Magda to have the mower inspected.
4.) Victor has express authority to sell the tools and implied authority to allow Magda to have the mower inspected.
4.) Victor has express authority to sell the tools and implied authority to allow Magda to have the mower inspected.
Shafik and Noor to sell his 1965 Mustang convertible for him and send him the money in England, where he was starting a business. He told Noor to sell the car for whatever she could get above $25,000. Noor advertised the car for a month and did not get an offer over $17,000. Finally, Salim offered $21,000 and Noor accepted, thinking that it was the best price she could get. Which of the following statements is TRUE?
1.) Salim is entitled to buy the car for $21,000 and Shafik can sue Noor for the balance of $4,000 for her breach of the agency contract.
2.) Salim cannot enforce the sale of the car since Noor did not have authority to sell for less than $25,000, and Salim can sue Noor for breach of warranty of authority.
3.) Salim can enforce the sale of the car but he will have to pay $25,000 to Shafik and sue Noor for the $4,000 difference.
4.) None of the above statements is true.
1.) Salim is entitled to buy the car for $21,000 and Shafik can sue Noor for the balance of $4,000 for her breach of the agency contract.
Victor signed a standard exclusive right to sell listing agreement appointing Andrew as his agent to sell his country estate, Whiteacre, at a price of $500,000 cash. After 3 weeks and numerous open houses, Andrew obtained a cash offer from Peter of $450,000. Since Victor was away for a week, and not wanting to lose what he now felt was an advantageous sale, Andrew signed the contract of purchase and sale as vendor on behalf of Victor who was shown as the principal. Subsequently, Victor, feeling the price was too low, refused to sign the deed of conveyance on the completion date.
Based on the above facts, consider the following statements and select the best answer.
A. Peter cannot enforce the contract against Victor since a listing does not authorize a licensee to sell.
B. Peter can sue Andrew for damages for breach of warranty of authority.
C. Peter can enforce the contract against Andrew since he signed as vendor.
D. Peter cannot enforce the contract against Victor since Victor did not hold out Andrew as his agent to sell.
1.) C and D are true; A and B are false.
2.) A, B, C, and D are false
3.) A, B, C, and D are true
4.) A, B and D are true; C is false
4.) A, B and D are true; C is false
What is the result where an agent enters a contract on behalf of his principal for which he has no authority and the principle later adopts the contract?
1.) Such a contract cannot be binding on the principal unless the contract is remade after the principal extends her authority.
2.) The principal will be bound by the contract but will have a claim for damages against her agent for breach of the agency contract.
3.) The contract will not bind the third party if it decides that it does not want to make the contract after learning of the agent’s initial lack of authority.
4.) The contract is binding on both the third party and the principal and there is no liability on the part of the agent.
4.) The contract is binding on both the third party and the principal and there is no liability on the part of the agent.
When a real estate company is acting not only as the listing agency for a property but also as the agent for the buyer, the company has become a dual agent. This situation presents an obvious conflict; however, the company can continue to act for both parties if the agent promptly:
A. makes full disclosure to both the vendor and the purchaser of the existence of the dual agency.
B. obtains permission from both principals to proceed in the matter.
C. obtains a new listing contract from the purchaser outlining the dual agency role.
D. discloses the identity of both the vendor and the purchaser to the opposite party.
Which of the following is/are TRUE?
1.) A and B only
2.) A, B, and C only
3.) D only
4.) The agent must cease to act in the situation.
1.) A and B only
Valdi, an owner of real property, told Abdul, a real estate agent, in part as follows: “You have sold and exclusive authority to sell my property. I will pay you a commission of 6% if the property is sold.” Abdul agreed and they shook hands to seal the deal. Which of the following statements is TRUE?
1.) The above contract means that Valdi must pay 6% of the sale price to Abdul unless Valdi sells the property himself.
2.) Abdul may accept any offer on Valdi’s property which meets Valdi’s terms.
3.) It would be prudent for this contract to be in writing.
4.) The above contract is called a statutory power of attorney.
3.) It would be prudent for this contract to be in writing.
Which of the following events will terminate an agency relationship?
1.) Revocation of the agency by the principal.
2.) Frustration
3.) Performance
4.) All of the above
4.) All of the above
An agent will be personally liable to third parties:
1.) whenever the agent contracts on behalf of a principal.
2.) where the agent fails to disclose that he or she is an agent.
3.) where the agent has no written authority.
4.) in all of the above circumstances
2.) where the agent fails to disclose that he or she is an agent.
Which of the following are TRUE statements about the relationship between the agent and principal?
A. In buyer-agency the vendor and the buyer each enter into a separate agency relationship with their respective agent.
B. Agency disclosure has been interpreted to require that agents disclose that their primary responsibility is to protect and promote their principal’s interests while remaining responsible for fair and honest dealings with all parties.
C. In sub-agency both the listing agent and the selling agent have the vendor as their principal.
D. In sub-agency the selling agent has obligations to the vendor, and the buyer is the third party.
1.) A and C only
2.) B and D only
3.) A, B, and D only
4.) All of the statements are true.
4.) All of the statements are true.
Eric wanted to move into a larger house and listed his home with Andrew, a licensed real estate agent. The listing agreement contained the following clause:
The seller hereby lists exclusively with the Listing Agent the Property until 11:59pm on August 30, 2009.
One or more of the following statements may be TRUE.
A. The listing agreement may be a multiple listing agreement.
B. The listing agreement is an exclusive listing agreement.
C. The listing agreement grants to Andrew a power of attorney to accept offers on behalf of Eric.
D. The listing agreement is an open listing.
Without knowing more about the listing agreement, indicate which statements are TRUE.
1.) A and D only.
2.) A and B only
3.) D only
4.) B and C only
2.) A and B only
Which of the following is TRUE?
A. A listing agent owes the same duties to a purchaser, as they do to their principal.
B. If an agent exceeds his or her authority when dealing with a third party, the agent may be liable to pay to that party for breaching his or her warranty of authority.
C. The principal will always be liable to the third party for losses suffered as a result of the agent exceeding his or her authority.
D. Under common law, an agent must disclose any information that may influence the principal’s conduct.
1.) A only
2.) B only
3.) A and C only
4.) B and D only
4.) B and D only
A standard Multiple Listing Services (MLS) contract must:
1.) have the property sold by the listing agent.
2.) be for a higher rate of commission that other listing contracts.
3.) be submitted to the Real Estate Board before the property may be sold.
4.) meet none of the above requirements.
4.) meet none of the above requirements.
