## Facts

- Erica Borden owned a residential property in Palm Springs, California and signed a written “Exclusive Authorization and Right to Sell” agreement with real estate broker Ben Blank.
- The agreement granted Blank an exclusive and irrevocable right to sell the property for seven months.
- The contract set Blank’s compensation at 6% of the selling price if the property sold during the listing term.
- The contract also contained a “withdrawal-from-sale” clause requiring Borden to pay 6% of the stated listing price ($85,000) if she withdrew the property from sale, transferred or leased it without the broker’s consent, or made it unmarketable by her voluntary act during the term.
- Blank began marketing the property and incurred advertising expenses.
- About two months into the listing term, Borden told Blank the property was no longer for sale and that he had no further right to market the property or collect a commission.
- No sale occurred after Borden’s withdrawal, and Blank sued to recover the 6% amount specified in the withdrawal clause.

## Issues

1. Whether a withdrawal-from-sale provision in an exclusive-right-to-sell brokerage contract requiring payment of a stated percentage of the listing price upon withdrawal is an unenforceable penalty or invalid liquidated damages under California Civil Code §§ 1670–1671.
2. Whether such a provision is enforceable as a term providing for alternative performance rather than damages for breach.

## Decision

- The California Supreme Court affirmed the judgment for Blank.
- The court held the withdrawal-from-sale clause was enforceable and did not constitute an unlawful penalty under Civil Code §§ 1670–1671.
- The court construed the clause as providing for alternative performance: the owner could either keep the property on the market under the exclusive listing or withdraw it and pay the specified amount.
- The court declined to extend the attorney-fee discharge rule of *Fracasse v. Brent* to real estate brokerage listing agreements.
- The trial court’s award of $5,100 (6% of $85,000), plus interest, was upheld.

## Legal Principles

- A contractual provision is not a penalty where it gives the promisor a genuine choice between two agreed performances, one of which is payment of a specified sum upon electing to terminate or withdraw.
- Civil Code restrictions on liquidated damages generally apply to sums stipulated “in case of breach”; they do not apply when the payment is part of an alternative-performance structure rather than a punitive measure to compel performance.
- Exclusive-right-to-sell brokerage agreements are treated as commercial contracts; absent overreaching, standard allocation of risk and compensation terms may be enforced as written.
- The limitation of a discharged attorney to quantum meruit under a contingent-fee agreement does not automatically apply to brokerage listing contracts.

## Conclusion

The court enforced a standard withdrawal-from-sale clause in an exclusive real estate listing as an option for alternative performance, allowing the broker to recover the stated 6% amount upon the owner’s withdrawal during the listing term, without applying penalty or liquidated-damages invalidation under Civil Code §§ 1670–1671.


Blank v. Borden, 524 P.2d 127 (Cal. 1974)