Diane is an affiliate broker at Volunteer Realty in Nashville. She obtains a signed exclusive right-to-sell listing agreement with homeowner Greg for his property at 450 Maple Drive. Two weeks later, Diane's broker license is revoked by TREC for misconduct. Greg, believing his listing is now void, immediately signs a new listing agreement with a competing brokerage. Under Tennessee law, what is the most accurate statement about the status of the original listing agreement with Volunteer Realty?
Correct Answer
A) The listing agreement remains in effect because it is a contract between Greg and Volunteer Realty as the brokerage, not with Diane personally
Under Tennessee law (Tenn. Code Ann. § 62-13-101 et seq.), a listing agreement is a contract between the seller and the brokerage firm, not between the seller and the individual affiliate broker. Diane, as an affiliate broker, procured the listing on behalf of Volunteer Realty, but the legal party to the contract is the brokerage. The revocation of Diane's individual license does not terminate the brokerage's contractual rights or obligations under the listing. The Broker-in-Charge at Volunteer Realty can reassign the listing to another affiliate broker within the firm. Greg's new listing with a competing brokerage may therefore expose him to claims for breach of the original exclusive right-to-sell agreement.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
An option contract gives one party the exclusive right, but not the obligation, to purchase or lease a property at a specified price within a specified time period. The buyer pays option consideration to keep the option open.
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