Agency & Authority — NextGen Bar practice question

A landowner authorizes a real estate agent to find a buyer for a vacant parcel at the best available price. Without telling the landowner, the agent arranges for the parcel to be sold to a limited liability company that the agent secretly owns, at the full appraised value. The agent discloses none of this. When the landowner later learns that the agent was the true buyer, she seeks to rescind the sale, even though the price matched the appraisal.

May the landowner rescind the sale to the agent's company?

Option A. Incorrect answer. No, because the parcel sold at its full appraised value, causing the landowner no loss.
Option B. Incorrect answer. No, because the agent found a ready, willing, and able buyer exactly as he was instructed.
Option C. Correct answer. Yes, because the agent engaged in undisclosed self-dealing in the very transaction.Correct
Option D. Incorrect answer. Yes, but only if the landowner can prove the agent also acted in subjective bad faith.

Why

The duty of loyalty bars an agent from dealing with the principal as an adverse party — here, secretly buying the very property he was hired to sell — without the principal's informed consent. Because the agent concealed that he was the buyer, the landowner may rescind, even at appraised value (C). A repeats the fair-but-disloyal fallacy: a fair price does not cure undisclosed self-dealing, because the breach is the hidden conflict itself. B misframes the task — the agent was to find a buyer for the principal's benefit, not to become the buyer for his own. D adds a bad-faith element the law does not require; the conflict and nondisclosure alone establish the breach, so the landowner need not prove the agent's subjective bad faith to rescind.

Why