A Real Estate Agent, by Virtue of His Fiduciary Duty

question 141

Multiple Choice

A real estate agent, by virtue of his fiduciary duty to his principal, is not allowed to buy the property being sold by his principal without full disclosure to and consent from his principal. The real estate agent does not want to disclose that he is the buyer of the property, so he forms a corporation and takes an offer to his principal from the corporation. Based on these facts, which of the following is true if the principal finds out the corporation/buyer is owned by the real estate agent and objects to the contract?

• A) The court would enforce the contract because the corporation is a separate legal entity in the eyes of the law.
• B) The court would enforce the contract because this is not a direct breach of the agent's fiduciary duty.
• C) The court would not enforce the contract and would "lift the corporate veil."
• D) The court would dissolve the corporation.
• E) The court would enforce the contract, but the principal would be able to claim any profits from the agent when he took them out of the corporation.

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