Broker Chen holds a six-month exclusive right-to-sell listing on a Detroit property owned by Patricia. Two months into the agreement, Patricia decides she no longer wants to sell and verbally tells Broker Chen she is revoking the listing. Broker Chen reminds Patricia that the listing has four months remaining. Under Michigan law, which statement BEST describes the legal effect of Patricia's unilateral revocation?
Correct Answer
B) Patricia has the power to revoke the agency, but Broker Chen may have a claim against Patricia for damages if the revocation breaches the listing contract.
Under Michigan agency law, a principal always retains the power to revoke an agency relationship, even if doing so breaches a contract. Patricia has the power — though not necessarily the legal right — to terminate the listing early. However, because the exclusive right-to-sell listing is also a bilateral contract, her unilateral revocation before the agreed expiration date may constitute a breach of contract, exposing her to a claim for damages by Broker Chen. This damages claim could include marketing expenses incurred and, in some circumstances, the commission that would have been earned. This distinction between the power to revoke and the right to revoke without liability is a key principle under Michigan agency law and the Michigan Occupational Code (MCL 339.2501 et seq.).
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Related Topics & Key Terms
Key Terms:
Related Concepts
An agency relationship created when a principal's actions or words lead a third party to reasonably believe that an agent has authority, and the principal fails to correct this belief.
An agency relationship created when a principal approves or accepts an agent's previously unauthorized actions, effectively granting authority after the fact.
The legal requirement for real estate agents to inform all parties about who they represent in a transaction, typically provided at first substantive contact.
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