Question

John Trident was a real estate agent working for Quantum Real Estate Ltd. His sister-in-law Jennie was looking for some income property, and after some searching John Trident entered into a deal with Mr. and Mrs. Lipton, persuading them to list their property for sale with him and subsequently presented an offer to purchase from his sister-in-law, who used her maiden name (P. Hayes) so that the sellers would not know that he was related to the purchaser. Before the deal was to close, the Liptons discovered the relationship between the agent and the purchaser and refused to go through with the deal. John Trident sued for his commission and his sister-in-law sued for specific performance. Explain the arguments that are available to the sellers in response to these claims. How would your answer be affected by the knowledge that the sister-in-law of John Trident had disclosed to him that she was willing to pay between $250,000 and $300,000 for the property, and in negotiations that followed this was not disclosed to the sellers? In fact, the first offer made by his sister-in-law was only $270,000. The sellers eventually took $285,000 not knowing that the purchaser was willing to go to $300,000. The actual fair market value of the property was determined to be $285,000.

It worth 10 marks so please explain it briefly. I need the answer within an hour

Answer 1

(i) Explain the arguments that are available to the sellers in response to these claims.  

• Agent breached his fiduciary duties
• Agent planned to defraud the seller
• Specific performance is for unique products

(ii) How would my answer be affected.

• The seller is obligated to sell the property to John's sister-in law
• Seller is obligated to pay commission to John
• Seller can deduct the difference from the John's commission

Explanation:

(i) Explain the arguments that are available to the sellers in response to these claims.  

The seller, Mr. and Mrs. Lipton is the principal and John Trident is the agent. The seller can argue that because agents owe the principal fiduciary duty to act in good faith and have no conflict of interest, John Trident breached his duties by showing conflict of interest and planning to sale the property to his sister-in law and not disclosing this conflict has validated the sellers action to terminate the agency relationship and not pay the commission.

Also the seller can argue that John Trident ,the agent planned to defraud him because the agent intentionally changed his sister's in law name so that the seller would not realize the relationship between the agent and the buyer hence the contract is void and the agent does not qualify for the commission.

The seller can argue that he does not owe specific performance to Jennie, because she can find another property and specific performance is for unique properties/products.

(ii) How would my answer be affected.

Because the seller had accepted the $285,000 offer and the market value of the property was the same amount($285,000), the seller cannot rescind the contract with Jennie (John Trident sister-in-law).The seller is contractually obligated to sell the property to John's sister-in-law. The seller is obligated to pay John Trident commission but because the agent did not act in good faith during the negotiation, the seller can deduct the difference from the agent's commission.