South-Western Legal Studies in Business

Agent Not Obligated to Minimize Potential Payment from Principal
Description Nebraska high court held that where an agent was promised a 6% commission for obtaining a buyer for property, unless one particular buyer bought the property, in which case the agent only received 1%, the agent had no duty to make sure the low-commission buyer would get the property when a full-price buyer made an offer first. There was no negligent misrepresentation in this instance.
Topic Agency
Key Words Broker; Duty; Negligent Misrepresentation; Fraud; Real Estate
C A S E   S U M M A R Y
Facts The Boneses entered into an exclusive listing agreement with Agri Affiliates to sell their ranch land in Nebraska. Agri was to receive a commission of 6% for finding a “willing and able” buyer at the asking price of $495,000. If the current tenant of the property bought the land, the commission would be 1%. Agri obtained a buyer for the full price. Hearing that there was a buyer, the tenant offered to buy at $495,000, but Agri insisted that the initial buyer had first right to the property. The Boneses then refused to pay Agri the 6% commission, claiming negligent misrepresentation by Agri. The Boneses contended that Agri had a duty to allow them to sell to the tenant so the commission would be 1% rather than 6%. The district court held for Agri. The Boneses appealed.

Affirmed. Negligent misrepresentation is a valid theory for liability in this context. To recover on that basis, one must show that one who, in the course of his or her business, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he or she fails to use reasonable care in obtaining or communicating the information. In fraudulent misrepresentation, one becomes liable for breaching the general duty of good faith or honesty. In a claim of negligent misrepresentation, one may become liable even though acting honestly and in good faith if one fails to exercise the level of care required under the circumstances. Here, there was no breach of the broker’s fiduciary duty to the sellers, so Agri is owed the 6% commission. Both parties knew of the commission arrangement and had agreed to it.

Citation Agri Affiliates, Inc. v. Bones, 660 N.W.2d 168 (Sup. Ct., Neb., 2003)

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