An Iowa licensee represents the seller in a transaction. During negotiations, the buyer asks the licensee whether the seller would accept $270,000 instead of the listed $285,000. The licensee knows the seller has already told her confidentially that she would accept anything over $265,000. The licensee responds, 'I can't speak for the seller, but I'll present your offer.' The buyer submits an offer at $270,000, which the seller accepts. Did the licensee handle the situation correctly under Iowa agency law and contract principles?
Correct Answer
B) Yes, because the licensee properly protected the seller's confidential negotiating position while agreeing to present the buyer's offer
The licensee correctly protected the seller's confidential information. Under Iowa agency law and Iowa Code Chapter 543B, a seller's agent owes fiduciary duties to the seller, including the duty of confidentiality. The seller's minimum acceptable price is confidential information that the licensee must not disclose to the buyer. By declining to reveal the seller's bottom line and agreeing to present the offer, the licensee fulfilled her agency obligations properly.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A bilateral contract is an agreement in which both parties exchange promises and are both obligated to perform, while a unilateral contract is one in which only one party makes a promise and the other party is not obligated to act.
A breach of contract occurs when one party fails to perform their obligations under the contract without a legal excuse. The non-breaching party is entitled to legal remedies including damages, specific performance, or contract rescission.
Consideration is something of value exchanged between parties to a contract, making the agreement legally binding. It can be money, a promise to act, a promise to refrain from acting, or anything else of value.
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