Question

chris, a real estate agent for the hagens, is granted authority to negotiate a real estate contract on behalf of the hagens with the greens. the greens have been in contact with chris regularly throughout the process and are aware he represents the hagens. one day, the hagens decide to fire chris but they do not communicate this to the greens. chris continues to negotiate with the greens, who now sign a contract obligating the hagens to buy the house. are the hagens bound to the contract with the greens?

Answer 1

The Hagens may not be bound by the contract if Chris was fired and lost his actual authority, although the concept of apparent authority or agency by estoppel could apply if the Greens reasonably believed Chris was still authorized due to the Hagens' failure to notify them.

Step-by-step explanation:

In the scenario where Chris, a real estate agent, is fired by the Hagens but continues to negotiate without their knowledge, the contract he enters into with the Greens on the Hagens' behalf may not be binding on the Hagens. This is because Chris no longer has actual authority to act as their agent. The key concept here is the authority of an agent to bind their principal. Since the Greens were not notified of the termination, they might assume Chris still has apparent authority, which could potentially lead to the Hagens being bound by the contract if the Greens reasonably believed Chris was still authorized. However, as the Hagens did not communicate the revocation of Chris's authority to the Greens, the situation might invoke the doctrine of apparent authority or agency by estoppel, which protects third parties who are misled by the appearance of authority where the principal’s actions have contributed to this misconception.