A Missouri salesperson with Gateway Realty represents both the buyer and the seller in the same transaction without disclosing this dual representation to either party. The buyer submits an offer that the salesperson presents to the seller, who accepts. After closing, the buyer discovers the undisclosed dual agency and seeks to void the contract. Under Missouri law, what is the MOST likely outcome?
Correct Answer
B) The contract is voidable at the buyer's election because of the undisclosed conflict of interest
Under Missouri law (RSMo § 339.750 and MREC regulations), a licensee acting as a dual agent must obtain the informed written consent of both parties before acting in that capacity. Failure to disclose dual agency is a violation of the licensee's fiduciary duty and constitutes a material misrepresentation. A contract entered into without required disclosures is voidable — not void — meaning the injured party (the buyer) has the election to rescind or affirm the contract. The buyer is not automatically deprived of the contract's benefits but may seek to void it based on the undisclosed conflict.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Liquidated damages are a predetermined amount of money specified in the contract that the non-breaching party is entitled to receive if the other party breaches. In real estate, the earnest money deposit typically serves as liquidated damages.
Novation is the substitution of a new contract for an existing one, or the replacement of one party with a new party, with the consent of all parties involved. The original party is completely released from all obligations.
Offer and acceptance is the process by which one party proposes specific terms for a contract and the other party agrees to those exact terms, creating mutual assent. This mutual agreement, also called a meeting of the minds, is an essential element of every valid contract.
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