Case Problem with Sample Answer. In July 2001, John Warren viewed a condominium in Woodland Hills, California, as a potential buyer. Hildegard Merrill was the agent for the seller. Because Warren’s credit rating was poor Merrill told him he needed a co-borrower to obtain a mortgage at a reasonable rate. Merrill said that her daughter Charmaine would “go on title” until the loan and sale were complete if Warren would pay her $10,000. Merrill also offered to defer her commission on the sale as a loan to Warren so that he could make a 20 percent down payment on the property. He agreed to both plans. Merrill applied for and secured the mortgage in Charmaine’s name alone by misrepresenting her daughter’s address, business, and income. To close the sale, Merrill had Warren remove his name from the title to the property. In October, Warren moved into the condominium, repaid Merrill the amount of her deferred commission, and began paying the mortgage. Within a few months, Merrill had Warren evicted.
Warren filed a suit in a California state court against Merrill and Charmaine. Who among these parties was in an agency relationship? What is the basic duty that an agent owes a principal? Was the duty breached here? Explain. [Warren v.
Merrill, 143 Cal.App.4th 96, 49 Cal.Rptr.3d 122 (2 Dist.
2006)]
After you have answered Problem 22.5, compare your answer with the sample answer given on the Web site that accompanies this text. Go to www.cengage.com/blaw/fbl, select “Chapter 22,” and click on “Case Problem with Sample Answer.”