Oregon 30-Hour Real Estate Law Practice Test

In which situation is there a conflict between two fiduciary duties?

1. A seller insists that his agent interpret the legal implications of him breaching his contract with a buyer.

2. The client complains that the agent is not marketing the property effectively.

3. The buyer wants to know about the neighborhood schools.

4. The agent needs to discuss closing costs with the buyer.

The correct answer is: A seller insists that his agent interpret the legal implications of him breaching his contract with a buyer.

A situation arises when a seller insists that their agent interpret the legal implications of breaching a contract with a buyer, creating a conflict between the fiduciary duties of loyalty and disclosure. The agent has a primary obligation to act in the best interest of the client (the seller) while also being required to disclose relevant information to other parties involved in the transaction. In this context, the seller's request poses a dilemma: if the agent provides legal interpretations that favor the seller, they could be risking an ethical breach because such advice may not fully disclose potential consequences or liabilities associated with contract breaches. The agent typically should not provide legal advice, as this may lead to a conflict with the duty to act competently and honestly while also maintaining the integrity of the transaction. Therefore, the tension between these fiduciary responsibilities illustrates a classic scenario of conflicting duties in real estate. In contrast, the other scenarios do not present clear conflicts between fiduciary duties. They involve standard practices where agents work within their duties to serve client interests without jeopardizing the obligations to other parties involved in the transaction.