12.1 Review of Legal Foundations

Listing agreements are governed by agency law (relationship, duties, authority) and contract law (enforceability, validity, termination).

Cornerstones of agency law in a listing agreement:

Listing broker and client are the principal parties to the listing contract.
The other side of the transaction is typically a customer/prospect.
Assistants to the listing broker may be agents of the listing broker and potentially subagents of the client (depending on the arrangement and state rules).

A listing agreement establishes an agency relationship that commits the agent to fiduciary duties to the client while fulfilling the agreement.

Listings are typically special (limited) agency agreements.
A broker generally cannot bind the client to a contract unless expressly authorized or given power of attorney.
Clients are generally liable only for broker actions within the granted scope of authority.

Bilateral vs. unilateral: depends on listing type and wording (open listings often unilateral; many exclusives function as bilateral).
Validity: must meet valid contract requirements to be enforceable.
Termination: can end by performance, infeasibility, mutual agreement, rescission, revocation, abandonment, lapse of time, invalidity, or breach.
Legal form: may be oral or written, but many states require certain listings (especially exclusive right-to-sell) to be written to be enforceable.
Assignment: listings are personal service contracts and generally not assignable.

Topic 12.1 Check-In

Choose the best answer for each question, then select Check Answers.

A listing agreement is governed by:

Listing agreements are governed by both agency law and contract law.

Most listing agreements create what type of agency?

Listings are typically special/limited agency agreements.

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