We have seen that for the most part the agent’s duty to the client during the client’s performance of the contract is one of using the agent’s training and experience to “give his principal information which is relevant to affairs entrusted to him and which, as the agent has notice, the principal would desire to have.” Click here for a more detailed discussion of the Scope of Agency. To fulfill that duty, it is necessary for the agent to understand something of the client’s legal duties when performing a contract.
The parties to a contract must perform the promises contained in their agreement or risk liability under the contract. Failure to perform as promised under contract is called “breach.” Click here for a detailed discussion of breach of contract. Whether some action or inaction is or isn’t a breach can be a complicated legal matter well beyond the scope of agency of a real estate licensee. It follows that advice on whether a contract has been breached or the consequences of that breach is not something real estate licensees would normally be involved in.
That is not to say real estate agents should know nothing of the law of breach or that they never base business advice to clients on that knowledge. Rather, it is to say that an agent should never presume to advise a client that some action or inaction is or isn’t a breach of the contract. Instead, the agent should limit advice to an explanation of what the contract actually says or a simple explanation of the duties the law imposes on the parties to a contract. In addition to performing the promises contained in the contract, that mostly means explaining the related duties of good faith performance and best efforts.
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