Lecture 11/12: Agency and Estate Agency Flashcards
Agents
Transact through others, facilitated by intermediaries acting within the scope of authority, which has been conferred either expressly/by implication of principles
Relationship between 2 legal persons, whereby the principal appoints an agent to act on his behalf via an agency contract –> agent contact with 3rd party on behalf on the principal –> principal’s obligation to perform the contract facilitated through agent & principal bound by an act of agent acting within the usual, apparent authority
Types of Agents
- Universal Agent: An agent may be authoirsed to do anything that the principal has the power to do & bind the principal in the case of a general power of attorney
- Lasting power of Attonery (LPA): a legal document which allows a person more than 21 years old to have wide and comprehensive power to plan management of principal’s affairs in the event of a loss of mental capacity
- In the LPA, person making LPA (donor) appoints 1 or more persons (donee) to act and make decisions on his behalf - General Agent: represent the principal only in matters pertaining to a professional business –> has the general power to bind the company for any decisions he made with 3rd party
- Special Agent: authorised only to do a specific act/class of acts on behalf of principal
- Limited function, but actual scope of an agent’s authority depends on express/implied terms of agency agreement
- Agent’s act do not completely bind principal but agent act as the principal’s representative (sometimes)
- Extent of liability undertaken by agent can vary
a. Acting on behalf of principal, but even willing to undertake person’s responsibility and liability
b. Agent will not incur any rights or liability
Creation of Agency: Express
By express contractual agreement and ingredient of contract applies
No formality for creation of agency contract –> contract does not have to be in writing
Creation of Agency: Implied
Implied based on conduct and relationship to imply that agency relationship exists
- Where X acts for Y
- At Y’s request
- Y is agreeable to pay a commission to X
Such agreement is inferred from conduct of parties and circumstances of case where principal has consented to agent having some authority & agent has agreed
Creation of Agency: Ratification
Relationship of Principal and Agent can be created/extended retrospectively under Doctrine of Ratification –> though Agent not authorised to act for Principal, Principal can choose to adopt/confirm transaction –> Principal ratfiy & approved of it –> then Principal will be bound by transition to 3rd parties
Bolton v Lambert: Principal may ratify acts of agent in excess of authority at that tome to acquire rights and undertake liabilities against 3rd party under contract
- Defendant seller repudiation was not effective as the principal’s ratification related back to the time of agent’s unauthorised purchase
Fitzmaurice v Bayley: Agent entered into an unauthorised contract for purchase of property –> Principal had an expressed ratification, which is a letter stating that although the principal don’t know what the agent has done, but principal will stand by everything that the agent has done
Authority of Agents
- Express
- Implied acts that are incidental
- Apparent/ostensible authority: Not expressed, but implied from conduct –> works in favor of 3rd parties
- Freeman v Buckhurst Properties: Even though the person has not been officially appointed as MD, so long as the contracts are within the scope of the authority normally conferred to as MD –> works in favour of 3rd party as he should not be expected to find out about the position of MD
Duties of Agent: Owe to Principal
- To obey instruction by principal
- Exercise due care and skill
- Fiduciary duties include: duty of good faith, duty to disclose all material information, with no secret profit - duty to account (Klippisley v Knee Brothers), no conflict of interest with principal
Rights of Principal against Agent
Upon breach by Agent of duties, P can ask for resulting transaction to be set aside, claim any profit accruing to Agent, refuse to pay commission, as A had not earned the commission in a rightful manner
Rights of Agent against Principal
To be paid agreed remuneration upon proper performance of contract, opportunity to earn commission if agreed in contract, reimbursement of valid cost
Estate Agents Act
Act provides for the establishment of of a statutory board called Council for Estate Agencies to regulate Real Estate agencies in industry:
- To increase the standard of entrance of agents in real estate industry –> high entry requirement for agents
- Mitigate loopholes
- Mandatory industry exam,
- Agencies licensed
- Agents registered code of ethics
- Agent does not take a commission from both seller and buyer
- Standard agency agreements between clients and agents
Common Issues: Exclusive Agreement
Saleperson not to solicit buyer/tenant estate agency agreements from buyers/tenants who are already subject to exclusive buyer/tenant estate agency agreements –> valid period of exclusive agreements is up to a maximum 3 months
Non-exclusive Agreement
- More than 1 estate agent
- inform clients terms and conditions & services offered
- need to obtain client’s consent in writing in advance before advertisements about the property can be posted
Common Issues: Effective Cause of Sale
- Non-exclusive markeying arrangement, agent A finds potential buyer B –> makes an offer conveyed to seller
- B within a short period (1 week) purchased same property through another Agent X at the same offered price
- Agent A sued seller for commission & succeed –> as A was the effective cause of sale & no break in the chain of causation
Grandhome Pte Ltd b Ng Kok Eng: ingredients to see whether A should be entitled commission as the 1st person who brought buyer
Held: In order to establish effective cause, it must be established that:
1. An owner agreed to pay an agent a commission for finding a buyer of property
2. Agent engendered the interest of buyer in property
3. Buyer made an offer for property which agent conveyed to owner
4. Owner eventually sold property to the same buyer at the same price offered through the first agent
5. Events 2 and 4 took place within a short period of time
If buyer goes through someone else within a short time, no break in the chain of causation
Termination of Agency: Discharge contract
- Act of parties: mutual agreement, performance satisfactory fulfilled obligations, breach of condition –> revocation by principal
- Operation of law: insolvency (seller bankrupt), mental incapacity, death of agent/principal, vitiating factors where there is privity between Principal and Agent
- Doctrine of frustration: the contract is no longer being performed due to fault of neither parties (seller, buyer, agent)
