A vendor signs a sole agency agreement and gets her copy on Tuesday. On Wednesday morning the salesperson shows the house to a buyer, and at 3 pm the vendor cancels by email under s 130. A week later she sells privately to that buyer. What is the agency's position?
Correct Answer
A) It may rely on the agreement, because its pre-cancellation work enabled the sale.
Section 130(4) says that even though a sole agency agreement has been cancelled, the agent may rely on it if, before cancellation, the agent carried out agency work under the agreement and that work enabled a contract for the transaction. REA's guidance repeats that work done before cancellation that results in a sale keeps the agreement binding.
Why This Is the Correct Answer
Section 130(4) keeps the agreement alive where pre-cancellation work enabled the sale.
Why the Other Options Are Wrong
Option B: It has no claim, because the vendor cancelled within the 5 pm window allowed by s 130.
Section 130(4) preserves the agreement where work done before cancellation enables the contract.
Option C: It can claim only its advertising costs, not commission, because the agreement was cancelled.
Section 130(4) lets the agent rely on the agreement itself, which includes its commission terms.
Option D: It has no claim unless the buyer signed an introduction form.
Section 130(4) turns on whether the agency work enabled the sale, not on an introduction form.
Background Knowledge for Agency Practice
Source: https://www.legislation.govt.nz/act/public/2008/0066/latest/whole.html
Exam Tip for Agency Practice
Cancelling in time does not wipe out work already done that leads to the sale.
Common Mistakes to Avoid on Agency Practice Questions
- •Assuming a timely s 130 cancellation always ends any commission claim.
More Agency Practice Questions
A real estate agent receives two offers on a property at the same time. What is their primary obligation?
Which of the following situations would create a conflict of interest requiring disclosure by a real estate licensee?
Sarah is a licensed salesperson working for ABC Real Estate. When showing a property to buyers, who does she primarily represent?
Under the Real Estate Agents Act 2008, what is the primary duty that a real estate agent owes to their client?
Which licence allows a person to carry out real estate agency work for an agent, but only under supervision?
- → Under section 126 of the Real Estate Agents Act 2008, what must happen after the client signs an agency agreement for the agent to be entitled to commission?
- → A licensed agent discovers that their salesperson has been providing advice about tax implications of a property investment without appropriate qualifications. What is the agent's responsibility?
- → An agency agreement contains a clause stating that the agent's commission is payable even if the property is sold by the vendor directly to a buyer introduced by the agent during the agency period, but the sale settles after the agency expires. Is this clause enforceable?
- → What must a real estate agent disclose to a potential purchaser when showing a property?
- → Under a sole agency agreement, when is the vendor still liable to pay commission to the agent?
- → Sarah holds a salesperson's licence and works for ABC Real Estate. When presenting an offer to a vendor, who is legally responsible for ensuring all disclosure obligations are met?
- → A real estate agent discovers that a property has a leaky roof after the agency agreement is signed but before any offers are received. What is the agent's obligation?
- → Which of the following allows an agent to end an agency agreement before its expiry date?
- → Under the Real Estate Agents Act 2008, what is the primary fiduciary duty that a real estate agent owes to their client?
- → What must a licensee do when they become aware of a material defect in a property they are marketing?
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