Question 40

The broker should not obtain a power of attorney from the seller to enable negotiation with authority.

Obtaining a power of attorney is unnecessary in this context because the broker is already representing the seller and negotiating on their behalf. The other actions are critical to ensuring the corporation's authority and existence, while a power of attorney does not directly relate to the validity of the contract with the buyer.

A) confirm that the corporation is in existence

This step is crucial as it ensures that the buyer is a legally recognized entity capable of entering into contracts. If the corporation does not exist, any contract signed would be invalid, making it essential for the broker to verify its existence.

B) get a personal guarantee of performance from the signer

Securing a personal guarantee from the signer can provide an additional layer of security for the seller. It ensures that if the corporation fails to perform under the contract, the individual signer can be held personally accountable, thus protecting the seller's interests.

C) obtain a power of attorney from the seller to enable the broker to negotiate with authority

This action is unnecessary in this scenario. As the broker is already representing the seller, a power of attorney is redundant for the negotiation of the contract. The broker's authority to act on behalf of the seller does not require additional documentation in this case.

D) obtain a resolution of the board of directors that authorizes the signing of the contract

This step is important to confirm that the individual signing the contract has the authority to do so on behalf of the corporation. A board resolution ensures that the contract is legally binding and that proper corporate governance has been followed.

Conclusion

The correct answer is C because obtaining a power of attorney is not required when the broker is already representing the seller. In contrast, confirming the corporation's existence, securing a personal guarantee, and obtaining a board resolution are all essential steps that ensure the contract's validity and protect the seller's interests. Therefore, all other options are necessary to uphold the integrity of the transaction.