Kerry is interested in selling her convenience store for approximately $250 000
ID: 422656 • Letter: K
Question
Kerry is interested in selling her convenience store for approximately $250 000 to $300 000. As Kerry is unfamiliar with the commercial real estate market in Red Deer, she engages a real estate agent, Patrick. The engagement is a standard form listing agreement. Patrick shows the building to a young couple, Paul and Rick, who seem to be quite interested. In fact, they make an offer in writing to purchase the building for $250 000. They also indicate that they need a reply immediately. Patrick calls Kerry but is unable to reach her. Patrick is in a quandary, but knowing that Paul and Rick’s offer is in Kerry’s range, albeit at the bottom, Patrick accepts the offer on Kerry’s behalf (he signs the written offer). Upon learning of Patrick’s actions, Kerry is quite upset and wonders whether she must sell the building to Paul and Rick. Advise Kerry.
it's not for operation management course, it's for business law , i have selected operation management subject because i couldn't find business law
Explanation / Answer
Patrick had no legal authority to sign the written offer on behalf of Kerry. The agreement between the property owner and real estate agent, in form of a standard listing agreement, will not confer any form of authority to the agent to enter any contract on behalf of the owner. So in this case, Kerry can legally reject the contract as invalid with Paul and Rick, if Kerry doesn’t want to sell her property to them on their given offer. If wants to still pursue the offer, she can renew the contract with her signatures for the sale. Or Kerry can even decide to negotiate the price further with Paul and Rick, or look for other potential buyers, in search of a better offer.
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