Humber/Ontario Real Estate Course 3 Exam Practice

When do brokerage agreements typically terminate due to impossibility?

1. When a seller withdraws the listing

2. When a broker initiates a new listing

3. When the brokerage stops operations illegally

4. When an external condition prevents completion

5. When a buyer cancels a purchase

6. When the brokerage changes its business focus

The correct answer is: When an external condition prevents completion

A brokerage agreement typically terminates due to impossibility when an external condition prevents completion. This principle is grounded in contract law and refers to circumstances beyond the control of the parties involved that make it impossible to fulfill the obligations of the agreement. For instance, this could be due to natural disasters, significant changes in law, or unforeseen events that stop a transaction from occurring. This concept acknowledges that while parties generally must abide by their agreements, certain external factors can alter the feasibility of fulfilling those terms. Such scenarios provide legitimate grounds for termination due to impossibility, as the original conditions necessary for the agreement's execution no longer exist. The other options do not align with the concept of impossibility as they relate to decisions made by parties involved, such as withdrawal or cancellation. These actions are within the parties’ control and do not denote impossibility stemming from external factors. Thus, while they may lead to termination of the agreement, they do not invoke the legal concept of impossibility which the specified choice accurately represents.