New Jersey salesperson David represents seller Mrs. Lopez. During negotiations, the buyer's agent asks David whether Mrs. Lopez would accept $10,000 less than the asking price. David knows Mrs. Lopez is under financial pressure and would likely accept the reduction. Under his fiduciary duty to Mrs. Lopez, how should David respond?
Correct Answer
B) Decline to reveal Mrs. Lopez's financial situation and encourage the buyer's agent to submit the best offer their client is willing to make
David's fiduciary duty of confidentiality and loyalty to Mrs. Lopez requires him to protect information that could harm her negotiating position, including her financial situation and motivation to sell. By declining to reveal this information and directing the buyer's agent to submit their best offer, David fulfills his duties without being deceptive. He is not required to confirm or deny the seller's financial circumstances.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The legal principle that holds a broker responsible for the actions of their agents and employees performed within the scope of the agency relationship.
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.
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