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Blondell v. Ahmed - 247 N.C. App. 480, 786 S.E.2d 405 (2016)

Rule:

The Supreme Court of North Carolina has recently reiterated the long standing principle that there is implied in every contract a covenant of good faith and fair dealing. Also, the Supreme Court has consistently held that it is a basic principle of contract law that a party who enters into an enforceable contract is required to act in good faith and to make reasonable efforts to perform his obligations under the agreement.

Facts:

In March 2013, Sellers and Keystone Properties entered into the Listing Agreement. The parties used the "Exclusive Right to Sell Listing Agreement" form produced by the North Carolina Association of REALTORS, Inc. Pursuant to the Agreement, the listing would be for a period of one year (expiring in March 2014). Agent showed Sellers’ home to Buyers’ who thereafter made an offer to purchase the property. Sellers rejected the Buyers’ offer. On April 22, 2013, the Sellers informed Agent that they no longer wished to list their home for sale and of their desire to terminate the Listing Agreement. Accordingly, Agent prepared the Termination Agreement using another form provided by the Association of REALTORS (entitled "Termination of Agency Agreement and Release"). This Termination Agreement essentially provided that the parties would no longer be bound by the Listing Agreement. Further, the Termination Agreement provided that it would become "effective on the date that it has been signed by both the Parties." On the evening of April 22, the Agent e-mailed Sellers, attaching the Termination Agreement unsigned. On April 23, the Sellers executed the Termination Agreement and e-mailed it back to Agent.

Sometime thereafter but prior to May 2, 2013, and without the knowledge of Agent, Buyers and Sellers met to discuss a possible transaction. On May 9, 2013, Buyers presented a written offer to Sellers based on their verbal understanding. Prior to executing Buyers' offer, Sellers contacted Agent about the status of the Termination Agreement. During this communication, Sellers did not disclose to Agent that they had a written offer from Buyers that they intended to sign. On May 10, 2013, Agent executed the Termination Agreement on behalf of Keystone Properties and e-mailed a copy to Sellers. On May 11, 2013, Sellers executed the contract to sell their home to Buyers. The transaction closed in late June 2013, unbeknownst to Agent. Thereafter, Agent commenced the present action against Sellers contending that, pursuant to the Listing Agreement, Sellers became obligated to pay Keystone Properties a real estate commission when Sellers sold their home to Buyers. The trial court entered summary judgment in favor of Sellers. Agent appealed.

Issue:

Was it proper to grant summary judgment in favor of Sellers without determining whether the Sellers breached their duties under the Listing Agreement?

Answer:

No.

Conclusion:

The Court held that a listing agreement was not terminated nor did the obligations thereunder cease until the termination agreement was executed by the Agent, which was May 10. Given that the listing agreement was in full effect until May 10, there was evidence creating a genuine issue of material fact as to whether the Sellers breached their duty of good faith and fair dealing under the listing agreement where, after rejecting the Buyers' offer that the Agent presented, they then made an offer to terminate the listing agreement and began negotiating directly with the Buyers to sell the house without paying a real estate commission.

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