Termination of buyer agency agreement

Question:

The agent has a buyer looking to cancel the current buyer agency agreement with another firm as he was unhappy with the service. The other firm told him he cannot cancel. The buyer said he does not wish to continue. Is this ethical?
Answer:

Termination of buyer agency agreement

Buyers have the power to revoke a buyer agency agreement at any time. This is because an agency agreement, such as the WB-36 Buyer Agency Agreement, is a personal service contract based upon a special relationship of trust and confidence in the broker. Per the contract, the buyer may deliver a termination notice in writing. The power to revoke, however, is not a right to do so. Cancelling a buyer agency agreement may violate the broker`s rights under the contract. In that event, the broker may demand compensation for the damage sustained as a result of the cancellation. The broker`s damages, in general terms, might include reimbursement for expenses incurred by the broker, for example, out-of-pocket expenses such as the costs for mileage, advertising or other costs paid, and a reasonable amount for the broker`s time and services.

Lines 226-234 of the WB-36 Buyer Agency Agreement provide the following:

TERMINATION OF AGREEMENT Neither Buyer nor the Firm has the legal right to unilaterally terminate this Agreement absent a material breach of contract by the other party. Buyer understands that the parties to this Agreement are Buyer and the Firm. Agents for the Firm do not have the authority to enter into a mutual agreement to terminate this Agreement, amend the compensation terms or shorten the term of this Agreement, without the written consent of the agent(s)’ supervising broker. Buyer and the Firm agree that any termination of this Agreement by either party before the date stated on line 284 shall be effective by Buyer only if stated in writing and delivered to the Firm in accordance with lines 241-263 and effective by the Firm only if stated in writing by the supervising broker and delivered to Buyer in accordance with lines 241-263.
CAUTION: Early termination of this Agreement may be a breach of contract, causing the terminating party to potentially be liable for damages.

Legal advice

Licensees cannot give legal advice or opinions regarding the buyer`s obligations under the buyer agency agreement and consequences of the potential breach of the agreement....
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