12.1 Review of Legal Foundations

Agency Law

Parties

• 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).

Fiduciary Duties

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

Scope of Authority (Special/Limited Agency)

• 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.

Contract Law

• 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.

Quick Check-Ins (Self-Test)