Question

Long Corp. is a real estate developer and regularly engages real estate brokers to act on its behalf in acquiring parcels of land. The brokers are authorized to enter into such contracts, but are instructed to do so in their own names without disclosing Long's identity or Long's relationship to the transaction. If a broker enters into a contract with a seller on Long's behalf, what is the relationship between Long Corp. and the seller?

1) Long Corp. is the principal and the seller is the agent
2) Long Corp. is the agent and the seller is the principal
3) Long Corp. and the seller have a joint venture agreement
4) Long Corp. and the seller have no legal relationship

Answer 1

In the scenario where a broker contracts with a seller on behalf of Long Corp. without revealing Long Corp.'s identity, 1. Long Corp. is the principal, the broker is an agent, and the seller has no legal relationship with Long Corp.

Step-by-step explanation:

When a real estate broker enters into a contract with a seller on behalf of Long Corp. without disclosing the identity of Long Corp., the relationship is that Long Corp. is the principal and the broker is its agent. Long Corp. has given the broker the authority to enter contracts on its behalf, creating an agency relationship. The seller in this scenario does not have any legal relationship with Long Corp., as they believe they are entering into a contract with the broker as the principal. Therefore, the broker is essentially acting as a middleman between Long Corp. and the seller.

In the given scenario, option 1) Long Corp. is the principal and the seller is the agent is not correct because the seller does not act on behalf of Long Corp. Subsequently, option 3) Long Corp. and the seller have a joint venture agreement is also incorrect, as there is no joint enterprise between them. Lastly, option 4) Long Corp. and the seller have no legal relationship is the most accurate because the seller is unaware of Long Corp.'s involvement.