Final answer:
Oral dual agency is allowed when an agent represents both the buyer and the seller with their knowledge and consent. Other scenarios without clear consent or knowledge are considered unethical and illegal. Option 1 is correct.
Step-by-step explanation:
Oral dual agency is permitted when the agent represents both the buyer and the seller with their knowledge and consent. This arrangement requires explicit approval from both parties involved in the transaction.
The role of the agent in a dual agency situation is to serve the interests of both the buyer and seller while maintaining a neutral position, ensuring that confidential information is not disclosed to either party that would give them an advantage over the other.
It is vital to note that dual agency can create a conflict of interest, and it is heavily regulated or even illegal in some jurisdictions. Therefore, written consent is often required to provide clear evidence that both parties understand and agree to the dual representation.
In contrast, when agents represent both parties without their knowledge and consent, it is unethical and illegal. It is important that both buyers and sellers act independently and are well informed of the market conditions. Also, they should be able to enter into and leave the market whenever they choose, maintaining a fair competitive landscape.