Opinion ID: 1196953
Heading Depth: 2
Heading Rank: 2

Heading: summary judgementhayek and the property exchange

Text: Snyder contends that Hayek's failure to advise him of the presence of and failure to strike the disclaimer clause in the contract constitutes an actionable breach of duty. Hayek maintains that Snyder waived the breach of duty by signing the contract. In support of this contention, Hayek refers us to two cases wherein a real estate broker obviously breached his duty to his client, but was relieved of responsibility for his error by the client's act of signing the contract. In Kidd v. Maldonado, 688 P.2d 461, 462 (Utah 1984), the seller instructed his broker to include in the contract a subject to clause which would make the sale contingent on the seller's locating a new residence. The broker, however, inserted a clause that made the buyer's possession subject to the seller's relocation. Id. The seller sued the broker alleging a breach of the principal-agent relationship, and requested that the broker indemnify the seller for damages awarded to the buyers. Id. The Utah Supreme Court recognized that the broker had breached his duty to the seller, but found that: The language of the subject to clause in the earnest money agreement was known to the seller prior to presentation to the buyer. The seller read the agreement, and in particular the pertinent clause, before signing it; he knew the words used; and had an opportunity to raise any question concerning the language in the earnest money agreement with his real estate agent. The language at issue was nontechnical and readily understandable, and there is no hint of misrepresentation, fraud, or sharp dealing by the real estate agent in this case and none was pleaded. When a principal sees an act done by his agent and the act is not subject to misunderstanding by a reasonable person, the law does not permit the principal to ignore what is obvious, even if it be contrary to his instructions. When an agent exceeds his express authority, which must be assumed in this case because it is here on summary judgment, ratification by the principal releases the agent from liability in damages. Kidd, 688 P.2d at 462. Barta v. Kindschuh, 246 Neb. 208, 518 N.W.2d 98, 100 (1994) arose from a failure to accurately reflect the condition of the roof in a Property Disclosure Information form. The sellers assumed that their broker made the necessary changes to the document when he was informed of the true condition of the roof. Id. at 99. The broker, in his defense, stated that he gave the form to the sellers to read and left the decision to sign it up to them. Id. at 99-100. The Nebraska Supreme Court quoted and followed the reasoning of Kidd, and held that the sellers acquiesced in and ratified the acts of the agent when they read and signed the unmodified form. Id. at 101-02. We find these decisions, while well founded in the law of agency, to be incompatible with duties inherent in the relationship of broker and client. In Hagar v. Mobley, 638 P.2d 127 (Wyo.1981), we outlined the nature of this relationship. We said: Realtors, just like doctors, lawyers, engineering consultants, and builders, hold themselves out as professionals; it is their job to know their profession. People rely on and trust them. Failure to comply with either the accepted standards in the field or the standards society is willing to recognize as acceptable, is actionable. Hagar, 638 P.2d at 138. In Hagar, we stated that the accepted standards in the real estate field are provided by Wyo. Stat. Ann. 33-28-111 (Michie 1977). Hagar, 638 P.2d at 137. The applicable provision of that statute provides that, [f]ailing to advise the buyer and seller of all terms of the proposed sale at the time an offer is presented including estimated discounts and closing costs is a breach of the broker's duty to his client. Wyo. Stat. Ann. § 33-28-111(a)(x) (Michie Repl.1987). The terms of a proposed sale include not only those contained in the initial offer, but also those added by the broker in the contract for sale, even if they are part of the boiler plate language of a form contract. It is inconceivable to this Court that a broker can escape liability for failing to advise his client of the consequences of signing a document by allowing the client to sign the very document that the broker failed to explain. The circularity of such a rule is readily apparent, and provides no protection for the unsophisticated and unwary consumer who places his trust in his paid agent. The better rule, and the one which we find to be consistent with the standard of care imposed upon brokers in Wyoming, was well stated by the Supreme Court of Oregon in Prall v. Gooden, 226 Or. 554, 360 P.2d 759, 762 (1961): It also must be kept in mind that a real estate broker stands in a fiduciary relationship with his customer or client and is thus bound to protect his clients' interests. He must, therefore, make a full, fair and understandable explanation to the client before having him sign any contracts, particularly when those contracts are with the broker himself.    The broker should make his explanation commensurate with the education and understanding of the people he is dealing with, and if he is unable to give competent advice he should allow them to obtain it elsewhere. Thus, a broker's statutory duty to advise his client of the terms of the proposed contract is fulfilled when an explanation commensurate with the client's sophistication has been made. Whether a sufficient explanation has been made is a question of fact to be determined from the totality of the surrounding circumstances. Ordinarily, we would remand a case such as this to the district court to make the required factual determination; however, the undisputed facts in this case are such that no genuine question of material fact could be raised. Snyder is not the typical first-time home buyer who might benefit from a detailed explanation of all the terms contained in a contract for sale. Snyder fancies himself a sophisticated purchaser. He has bought, sold, and traded various parcels of real estate several times in the past. He was negotiating the purchase of a 1,960 acre farm for $526,500.00. He was savvy enough to require that the sellers prepare a statement of condition of property. That statement provided that the Sellers [made] no other representations of any kind relating to said property. Snyder read the document, and expressed neither concern nor confusion about the language. Hayek was justified in believing that a similar provision in the contract was understandable and acceptable to Snyder. Snyder has presented no evidence which would tend to prove that Hayek did not fulfill his duty to explain the terms of the contract. The district court's disposition on the motion for summary judgment was, therefore, appropriate.