A Virginia buyer submits an offer that includes an escalation clause stating she will pay $2,000 above any competing bona fide offer up to a maximum of $500,000. The seller receives a second offer for $480,000. The listing agent tells the first buyer that a competing offer exists and that her escalation clause brings her price to $482,000. The seller accepts. The first buyer later discovers no second offer actually existed and the listing agent fabricated it. Under Virginia law, which of the following best describes the consequences?
Correct Answer
A) The contract is voidable by the buyer due to fraudulent misrepresentation, and the listing agent may face disciplinary action by the VREB
The listing agent's fabrication of a competing offer to trigger the buyer's escalation clause constitutes fraudulent misrepresentation — a material false statement of fact made to induce the buyer to pay a higher price. Under Virginia law, a contract induced by fraud is voidable at the innocent party's (buyer's) election. Additionally, the listing agent's conduct violates Virginia license law (Va. Code § 54.1-2131) and VREB regulations, which prohibit dishonest and fraudulent conduct, exposing the agent to VREB disciplinary action including license revocation.
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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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