Chapter 6 – Fundamentals of Agency Law

Question 1

Most agency relationships are created by an express contract, known as a(n) ________.

Answer 1

agency agreement

Question 2

In the context of agency law, ________ is the granting by a principal to an agent the power to act on his or her behalf in certain specified ways.

Answer 2

authority

Question 3

An ________ at common law is any person who contracts to act for or on behalf of another who, in turn, is known as the principal.

Answer 3

agent

Question 4

At common law, the person for whom an agent has contracted to act for, and for whose benefit the agent is required to perform and make decisions is called the _________.

Answer 4

principal

Question 5

_________ is an agency relationship where a brokerage or registrant acts for multiple parties in a single trade in real estate, but because the duty of loyalty cannot be fulfilled to both clients, the clients agree to a limited form of agency representation.

Answer 5

Limited dual agency

Question 6

The Canadian Real Estate Association’s REALTOR® Code imposes a ______ standard of conduct on real estate professionals than The Real Estate Act.

Answer 6

higher

Question 7

TRUE or FALSE? Ethical codes of conduct of professional organizations have the same force of law as statutes.

Answer 7

False. Ethical codes of conduct are voluntarily adopted by certain members of the public that wish to be a part of a professional association. Members of the public do not have the choice of voluntarily adopting the obligations contained in statutes.

Question 8

What is warranty of authority?

Answer 8

Warranty of authority is an agent’s promise or guarantee to third parties that his or her actions fall within the scope of authority given by the principal. An agent acting outside of the scope of authority given by the principal breaches the warranty of authority.

Question 9

A person who holds a position of trust with respect to someone else and is obliged, by virtue of that relationship, to act solely in the other person’s benefit is a ________.

Answer 9

fiduciary

Question 10

________ is a legal principle that prevents someone from denying or contradicting a set of facts that he or she has previously expressed or impliedly asserted to be true.

Answer 10

Estoppel