California Real Estate SalespersonLaws of Agency and Fiduciary DutiesHard
A seller, without cause, revokes a broker's exclusive listing agreement two weeks before its expiration date, after the broker had already spent significant funds on advertising the property. Which statement best describes the legal effect of this revocation?
- AThe broker must sue for specific performance to force continuation of the agency
- BThe agency is terminated immediately, but the seller may be liable to the broker for damages caused by the wrongful revocation
- CThe revocation is void because agency cannot be terminated once created
- DThe broker retains agency authority until the listing's stated expiration date
Show answer & explanationAnswer & explanation
Correct answer: B. The agency is terminated immediately, but the seller may be liable to the broker for damages caused by the wrongful revocation
A principal always has the power to revoke an agent's authority, even wrongfully, and the agency terminates upon revocation. However, if the revocation breaches the listing contract, the broker may sue the seller for damages, such as advertising costs and lost commission opportunity, even though the agency itself has ended.
Why the other options are wrong
- A. Specific performance does not apply to personal service agency relationships.
- C. Agency can always be revoked by the principal, though it may create liability.
- D. Authority ends upon actual revocation, not at the stated expiration.
Termination by Revocation
A principal can always revoke an agent's actual authority, but if done wrongfully (breaching the contract), the principal may be liable in damages to the agent.
- Power to revoke ≠ right to revoke without liability.
- Agency ends immediately upon revocation.
- Broker's remedy is a damages claim, not specific performance.
Memory trick: 'You can always cut the string, but you might pay for the kite.'