87. A broker representing a seller is reviewing a contract for sale, and discovers that the buyer is signing as a corporation. The broker should take all of the following steps to ensure the validity of the contract EXCEPT
Answer: C
The broker should not obtain a power of attorney from the seller to enable negotiation with authority.
Obtaining a power of attorney from the seller is not necessary for the validity of the contract when the buyer is signing as a corporation, as the broker's authority is generally established through the listing agreement with the seller.
A) confirm that the corporation is in existence.
Confirming the existence of the corporation is a crucial step for the broker, as it ensures that the entity entering into the contract is legally recognized and capable of entering into binding agreements. This verification helps protect the seller’s interests in the transaction.
B) get a personal guarantee of performance from the signer.
Acquiring a personal guarantee from the signer can provide an additional layer of security for the seller. This ensures that if the corporation fails to fulfill its obligations under the contract, the individual who signed can be held personally accountable, thus enhancing the validity of the contract.
C) obtain a power of attorney from the seller to enable the broker to negotiate with authority.
This option is unnecessary in this context, as the broker typically acts under the authority granted by the seller through the listing agreement. The broker does not need a separate power of attorney to negotiate on behalf of the seller, making this step irrelevant for ensuring the contract's validity.
D) obtain a resolution of the board of directors that authorizes the signing of the contract.
Obtaining a board resolution is essential to ensure that the individual signing on behalf of the corporation has the authority to do so. This step confirms that the transaction has been approved at the corporate level, which is critical for the enforcement of the contract.
Conclusion
The broker should focus on confirming the corporation's existence, obtaining personal guarantees, and securing board resolutions, as these steps directly contribute to the validity of the contract. In contrast, obtaining a power of attorney from the seller is not necessary for negotiating the contract, thus making option C the correct choice.