Peter decided that he really wanted to purchase some land in Door County, Wisconsin. He had always loved vacationing in the area and, now that his job allowed him to work remotely, he dreamed of building on the land and moving there permanently.
Sven was the seller’s agent. Because Peter’s credit rating was poor, Sven told him he needed someone to co-sign the loan in order to get a reasonable rate on the mortgage. Sven said that for $10,000, his nephew, Matthew, would “go on title” until the loan and sale were finalized. Sven also said that he would defer his commission on the sale as a loan to Peter so that he could make a 20% down payment on the land. Peter agreed to pay the $10,000 and to take the loan from Sven.
Sven obtained the mortgage in Matthew’s name alone by misrepresenting his nephew’s address, employment, and income. To close the sale, Sven instructed Peter to take his name off the title to the property. In May, Peter started building his future home on the land. He repaid Sven the amount of his deferred compensation and started paying the mortgage. Six months later, once building was almost complete on the new home, Sven had Peter evicted. Peter filed a suit against Sven and Matthew.
Define the concept of an agency relationship, then state who among these parties was in an agency relationship.
What is the basic duty that an agent owes a principal? Was that duty breached here? Explain.
Discuss whether Peter is entitled to any remedies in this situation.
Post a follow-up question by suggesting additional facts that were not addressed in the hypothetical. To suggest additional facts, complete the following phrase, “How would you decide this case if . . . "