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 obtain a resolution of the board of directors that authorizes the signing of the contract.
To ensure the validity of the contract, the broker must take steps such as confirming the corporation's existence, securing a personal guarantee, and obtaining a board resolution. However, obtaining a power of attorney from the seller to negotiate with authority is not necessary in this context.
A) confirm that the corporation is in existence.
Confirming the corporation's existence is a crucial step in validating a contract signed by a corporation. This ensures that the entity is legally recognized and has the authority to enter into contracts, making this option essential for the broker's due diligence.
B) get a personal guarantee of performance from the signer.
Securing a personal guarantee from the signer protects the seller by ensuring that there is a personal obligation backing the corporation's performance under the contract. This step adds an additional layer of security and is a common practice when dealing with corporate signatories.
C) obtain a power of attorney from the seller to enable the broker to negotiate with authority.
Obtaining a power of attorney from the seller is not required for the broker to validate the contract signed by the corporation. The broker's role is to represent the seller in the transaction, but they do not need a power of attorney to ensure the validity of the contract signed by a corporate entity.
D) obtain a resolution of the board of directors that authorizes the signing of the contract.
Obtaining a resolution from the board of directors is important because it confirms that the individual signing the contract has the authority to do so on behalf of the corporation. This step is necessary to prevent any future disputes regarding the validity of the contract.
Conclusion
The correct answer is C, as obtaining a power of attorney from the seller is unnecessary for ensuring the validity of a contract signed by a corporation. In contrast, confirming the corporation's existence, securing personal guarantees, and obtaining board resolutions are critical actions that validate the transaction and protect the seller's interests. Therefore, all other options are pertinent steps in the process, while option C does not align with the necessary requirements.