National Real Estate Exam (PSI)ContractsHard
A broker takes a listing under which the seller promises to pay a commission only if the broker actually produces a ready, willing, and able buyer, while the broker makes no binding promise to procure one. What best characterizes this type of agreement?
- AA unilateral contract
- BA bilateral contract
- CAn option contract
- DAn executory contract
Show answer & explanationAnswer & explanation
Correct answer: A. A unilateral contract
An open listing is typically a unilateral contract: the seller promises to pay commission only if performance (producing a buyer) actually occurs, and the broker makes no reciprocal binding promise to perform.
Why the other options are wrong
- B. A bilateral contract requires mutual promises from both parties, which isn't the case in a listing where only the seller promises payment upon performance.
- C. An option contract grants a right to purchase property, unrelated to a listing agreement's commission structure.
- D. Executory simply means not yet fully performed; it doesn't describe the promise structure here.
Unilateral Contract
A contract in which only one party makes a binding promise, contingent upon the other party's performance of a specified act; commonly seen in open listing agreements.
- Only one party is bound by a promise
- The other party's performance, not promise, forms the contract
- Common example: open listings and option contracts
Memory trick: Unilateral = one promise, waiting for action.