11. Disclosing information.—The broker is bound to reveal to his employer all information he may have affecting his employer's interests in the property. Withholding information which naturally could be expected to influence the conduct of the employer in dealing with the property is a fraud on the part of the broker. He forfeits his right to recover commission by such an action. The broker, however, does not have to violate confidences. If a purchaser negotiate confidentially with a broker for some property and wishes the transaction made in the name of a dummy, the broker does not have to reveal to the owner the real purchaser. He should tell the owner, however, that the purchaser is a dummy acting for an undisclosed principal.
12. Statements made by broker.—A broker can make statements regarding the property based upon information furnished by the owner which he believes to be true. If a purchaser relies upon these state ments and contracts to purchase the property, but later rescinds upon learning that the statements were untrue, he will be relieved of his contract and is en titled to receive his money back. The broker, how ever, in such a case is entitled to his commission. He not ot at fault. If the broker makes unauthorized misrepresenta tions, a purchaser who had been induced to contract by reason of such misrepresentations would be entitled to receive his money back and be relieved of his con tract. Under such circumstances the broker would not be entitled to commission, because of his fraud. If the owner accepts the fruit of the broker's work and enters intp a contract with the purchaser knowing of the misstatements of the broker, he will be liable to the broker for a commission, even tho the purchaser be subsequently relieved of his contract. In a case of this kind the owner is deemed to have ratified the broker's acts.
It is an established rule of law that a principal is bound by the acts of his agent when the agent acts within the scope of his apparent authority. By rea son of this an innocent purchaser is relieved of his contract not only when it has been induced by mis representations made by the owner directly, but also when made by the broker employed by the owner. The broker can recover commission on the sale, how ever, whenever the misrepresentations were made by authority of his employer or were ratified by the em ployer. When the misstatements were unauthorized and the employer innocent, the broker loses his right to compensation.
Misrepresentations sufficient to relieve one from a contract must be about some material fact such as the amount of the rents, the size of the plot or the price actually paid for the property by a former buyer. Mere opinions as to present or future value will not be considered as misrepresentations even tho exagger ated. The New York courts have also decided that an unintentional misrepresentation on the part of the owner did not amount to a warranty to the broker and did not authorize a recovery of commission when the purchaser refused to enter into a contract. The mis representation concerned the size of the plot. It was held that the broker was employed to sell the plot, with which he was familiar, and not a certain number of feet of land. (Hatthman vs. Herdtfelder, 81 App. Div. 46.) If the broker makes misstatements to his employer to induce him to enter into a contract of sale, it is a breach of the broker's duty of good faith and a fraud upon his employer, and will cause a forfeiture of the broker's right for commission. This is so even tho the employer carry out the contract.
13. Termination of no time for the continuance of the contract is fixed by its terms, either party is at liberty to terminate it at will, sub ject only to the ordinary requirements of good faith. Usually the broker is entitled to a fair and reasonable opportunity to perform his obligation, subject of course to the right of the seller to sell independently. But that having been granted him, the right of the principal to terminate his authority is absolute and unrestricted, except only that he may not do it in bad faith and as a mere device to escape the payment of the broker's commission. The right of the parties to terminate the agency is clearly established by judicial decisions. The agency is also terminated by the death of either principal or agent; by the destruction of the subject matter ; by the bankruptcy of the principal ; by mutual consent and by the sale of the subject mat ter by other means than thru the agent. It is of course terminated when the object of the employment is performed, and it can generally be considered ter minated after the lapse of a reasonable length of time, except that the principal must act in good faith in con sidering it terminated for this cause.