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Real Estate > Lesson 8 > Flashcards

Lesson 8 Flashcards

1
Q

What is the relationship described by agency?

A

Agency is the relationship where the principal delegates authority to the agent to act on their behalf.

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2
Q

What is a key responsibility of the principal in an agency relationship?

A

The principal is legally bound by the acts of the agent.

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3
Q

Who does the principal have legal obligations to in an agency relationship?

A

The principal has legal obligations to third parties who have dealt with the agent.

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4
Q

What role does an agent play in an agency relationship?

A

The agent acts as an intermediary, exercising authority to perform tasks on behalf of the principal.

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5
Q

What is necessary for an agent to have in an agency relationship?

A

The agent must have the authority to act on behalf of the principal.

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6
Q

Provide an example of an agent and principal relationship involving financial management.

A

Stock Brokers & Investors.

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7
Q

Who can appoint an estate agent?

A

A principal can appoint an estate agent.

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8
Q

What authority does an estate agent have in relation to a principal?

A

An estate agent has no authority to act on behalf of the principal but owes duties to them.

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9
Q

What roles can a real estate agent undertake?

A

A real estate agent can:

Market properties
Introduce potential buyers or tenants
Negotiate terms and conditions in property transactions

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10
Q

What is the relationship hierarchy in real estate transactions?

A

The principal appoints the estate agent, and then the estate agent appoints the salesperson.

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11
Q

Who is the Principal in an agency relationship?

A

The principal is the individual or entity that appoints an agent to act on their behalf, such as a property owner or buyer.

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12
Q

Who is considered a Third Party in real estate transactions?

A

The third party is an individual or entity not directly involved in the agency agreement, typically someone interested in purchasing or selling the property.

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13
Q

Why is there “no relationship between agent and third party”?

A

The agent facilitates the transaction between the principal and the third party but does not have a direct legal relationship with the third party.

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14
Q

What are the two types of Actual Authority?

A

Actual authority can be express authority (explicitly granted) and implied authority (not stated but necessary to fulfill the agent’s duties).

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15
Q

How is an agency relationship established through consent?

A

Both the principal and the agent must give their consent to form the agency relationship.

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16
Q

What is Apparent Authority?

A

Apparent authority arises when a third party believes that the agent has the authority to act on behalf of the principal due to the principal’s actions or representations.

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17
Q

What are the characteristics of Apparent Authority?

A
  1. May be established through no written or verbal agreement;
  2. Involves actions or representations by the principal;
  3. A third party relies on these actions or representations.
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18
Q

What is Ratification in the context of agency?

A

Ratification occurs when the principal gives consent to the actions taken by the agent, effectively validating a contract that the agent entered into on their behalf.

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19
Q

What are the characteristics of Ratification?

A
  1. No written or verbal agreement prior
  2. Agent’s actions create a contract
  3. Principal gives consent to the contract after the fact
  4. The action can be backdated to apply to the past actions of the agent.
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20
Q

What is Express Authority in the context of agency relationships?

A

Express authority is the consent given by both the principal and the agent, allowing the agent to act with authority on behalf of the principal.

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21
Q

How can Express Authority be created?

A

Express authority can be created through:

Verbal agreement
Written agreement
A mixture of verbal and written agreements

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22
Q

What is Implied Authority in the context of agency relationships?

A

Implied authority arises when the principal does not expressly confer authority to the agent, but the actions and behaviors of both parties suggest that the agent has some authority to act.

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23
Q

How is Implied Authority determined?

A

It is determined by the conduct, actions, and behaviors of the parties involved, indicating the principal’s consent for the agent to act.

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24
Q

What is Apparent Authority in an agency relationship?

A

Apparent authority exists when an agent appears to have authority, but there is no express or implied authority granted by the principal.

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25
Q

How does Apparent Authority arise?

A

It arises when a third party relies on the appearance of authority based on something the principal did or said, leading them to enter a contract with the agent.

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26
Q

What must the principal’s action or representation do in regards to Apparent Authority?

A

It must create an impression that the agent has authority to act on behalf of the principal.

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27
Q

What happens if a third party enters into a contract with an agent acting under Apparent Authority?

A

The principal is bound by the agent’s actions, even if the authority was not expressly granted, because they are “estopped” from denying the agency.

28
Q

Can an agent make representations about their own authority?

A

No, an agent cannot bind the principal by making representations about their own authority; the appearance of authority must come from actions taken by the principal.

29
Q

Does a principal have a duty to correct misunderstandings about an agent’s authority?

A

Yes, a principal has a duty to correct a third party’s mistaken belief in an agent’s authority to act on the principal’s behalf.

30
Q

What happens if a principal fails to correct a misunderstanding regarding apparent authority?

A

If the principal could have corrected the misunderstanding but failed to do so, they are estopped from denying the existence of the agency and are bound by the agent’s acts.

31
Q

What does Ratification in an agency relationship mean?

A

Ratification means that an agency is created retroactively from a past date, allowing the principal to adopt acts performed by an agent without actual authority.

32
Q

Does the agent have actual authority when ratification occurs?

A

No, the agent does not have actual authority at the time of the act; they act without authorization.

33
Q

What must the principal do to enforce a contract that the agent entered into without authority?

A

The principal must ratify what the agent has done to enforce the contract.

34
Q

Can an unappointed agent be appointed through ratification?

A

Yes, an unappointed agent can be ratified or appointed subsequently by the principal.

35
Q

What does the doctrine of ratification allow the principal to do?

A

It allows the principal to adopt the agent’s past acts, thereby accepting the contract retroactively.

36
Q

How does ratification affect the effective date of the agent’s appointment?

A

The appointment of the agent is backdated to the time when the agent performed their act.

37
Q

How does ratification work in practice?

A

The principal retrospectively grants the agent with authority for their previous actions, and the law treats it as if the agent had authority from the beginning.

38
Q

What does an agent warrant to third parties?

A

Agents warrant that they are properly authorized to act on behalf of their principals.

39
Q

What happens if an unauthorized agent enters a contract?

A

The third party may sue the agent for any losses suffered due to the agent’s lack of authority.

40
Q

What can a principal do if an agent exceeds their authority and causes losses?

A

The principal can make a claim against the agent for those losses.

41
Q

What happens to the agent once a contract is formed between the principal and a third party?

A

The agent drops out of the picture, and the contract exists solely between the principal and the third party.

42
Q

Are agents indemnified for their liabilities?

A

Yes, agents are indemnified for liabilities reasonably incurred in executing their authority, except in cases of Breach of Warranty of Authority.

43
Q

Can salespersons act as Power of Attorney (POA) for clients (principals)?

A

No, salespersons cannot act as Power of Attorney for clients.

44
Q

What are some reasons for the termination of agency?

A
  1. Death of the principal
  2. Lapse of time
  3. Principal gives notice
  4. Agreement between the parties
45
Q

What is the duty of care in relation to estate agents and salespersons?

A

They are expected to adhere to tort law, which requires them to act with reasonable care to avoid harming others.

46
Q

What is the fiduciary duty of estate agents and salespersons under common law?

A

They must avoid conflicts of interest and act in the best interests of their clients.

47
Q

What type of duty do estate agents and salespersons have under contract law?

A

They have contractual duties as outlined in their agreements with clients.

48
Q

What statutory framework governs the duties of estate agents in Singapore?

A

The duties are governed by the Estate Agents Act.

49
Q

What does ‘Uberrimae Fidei’ mean in the context of agency relationships?

A

It means “utmost good faith,” indicating that parties to an agency contract must conduct themselves with the highest level of honesty and integrity.

50
Q

What is a fiduciary duty?

A

A fiduciary duty is the highest standard of care expected of a person at law, requiring them to act in the best interests of their principal.

51
Q

Who is considered a fiduciary?

A

A fiduciary is an individual who owes a strict legal duty to the principal based on a relationship of trust and confidence.

52
Q

What is the first key obligation of a fiduciary towards the principal?

A

The duty to act in good faith towards the principal.

53
Q

What does a fiduciary duty require regarding conflicts of interest?

A

The duty to avoid any conflict of interest.

54
Q

Can an agent profit from their position as a fiduciary?

A

No, a fiduciary should not profit from their position; they must act in the principal’s best interests.

55
Q

What should a fiduciary do regarding material information?

A

Promptly disclose any material information to the principal.

56
Q

What does it mean to act Utmost in Good Faith?

A

It means the fiduciary must conduct themselves with the highest level of honesty and integrity towards the principal.

57
Q

What responsibility does a fiduciary have regarding profits?

A

They should not make secret profits; any profits from the fiduciary relationship must be disclosed to the principal.

58
Q

What is required in terms of financial responsibility?

A

There should be a strict accounting of all monies received on behalf of the principal.

59
Q

What is the obligation regarding a client’s confidentiality?

A

A fiduciary must maintain the client’s confidentiality at all times.

60
Q

What is the first right of estate agents and salespersons?

A

Remuneration: They are entitled to negotiate their commission rates with clients as there are no fixed rates.

61
Q

What is required for an estate agent to make a rightful claim for commission?

A

The claim is valid if they are the effective cause of a sale or rental, meaning their introduction leads to a transaction within a reasonable time without breaking the chain of causation.

62
Q

What does the right of “No Reimbursement” entail for estate agents?

A

Agents cannot claim reimbursement for incurred costs if a transaction falls through since they assume the risk.

63
Q

How are the rights and duties of estate agents and salespersons defined?

A

They are defined and subject to the terms of the Estate Agency Agreement.

64
Q

What types of Estate Agency Agreements exist?

A

There are two types: Exclusive and Non-Exclusive agreements.

65
Q

What right do estate agents have regarding legal claims?

A

Agents have the right to claim against the client in court for unpaid commissions or fees.

66
Q

What types of properties does the Estate Agency Agreement apply to?

A

It applies to properties zoned as Residential or those partially used for residential purposes.

67
Q

Name some properties to which the Estate Agency Agreement is not applicable.

A
  1. Properties under construction sold by developers
  2. Properties under Enbloc Sales
  3. Overseas Properties
  4. Appointing an existing tenant to find a replacement tenant

Real Estate (19 decks)

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