Paper 1: Lesson 6 Flashcards
What is an Agency Relationship?
An agency relationship cannot be created only by one party. It must involve both parties where they consent to form this relationship.
Define “Agent”
An agent is a person representing and doing work for another. It is like a “middle man” between 2 other parties, forming a tripartite relationship (Agency Relationship).
Define “Agency”.
Agency is the relationship which arises where one person known as the agent acts for another known as the principal.
Through the acts of the agent, the principal and 3rd party may be brought into a contractual relationship.
Principal can limit the authority of the agent.
How is an agency relationship created?
- By Agreement (express)
- By Ratification (Implied)
- By Estoppel (Implied)
What is an agency agreement?
Agents can be appointed expressly in writing.
Examples:
1. Non Exclusive Agency Agreement
2.Exclusive Agency Agreement
3. Sole Agency Agreement.
What is an Exclusive Agency Appointment?
- Owner appoints only 1 estate agent to market the property.
- Owner agrees not to sell the property himself.
- If owner sells through himself or another agent, he will still need to pay the commission or compensation to the exclusive agent.
- Valid for max 3 months, but can be renewed.
What is a Non-sole/non exclusive appointment? (open listing)
- Owner appoints more than 1 agent to market the property. No limit to number of agents.
- Only the agent who closed the deal successfully gets the commission.
- No expiry date for non-exclusive agreements. The agency agreement is automatically terminated once ppty is sold/rented or upon withdrawal by client.
What is a Sole Agency appointment?
Owner appoints only 1 estate agent to market the property, but owner reserves the right to market the property himself.
- If owner sells the property himself, he need not pay commission.
- This appointment is often used by developer for uncompleted projects. Should the developer sell some units by themselves, e.g. to their business partners, they need not pay the sole agent commission.
Developer agrees not to engage any other estate agent unless it is under joint sole marketing agencies appointment.
What is co-broking?
Co-broking is when 2 salesperson are involved in the same property transaction and are working together to achieve the best possible outcome.
The sharing of fee between the 2 salesperson shall be mutually agreed upon upfront.
*1 agent cannot represent both seller and buyer in the same transaction and cannot collect a fee from more than 1 party.
What are the 2 ways agency can be formed?
- Ratification
- Estoppel
Explain “Agency by Ratification”
This means a principal (the person being represented) becomes bound by an act done by someone who was not their authorized agent at the time, but the principal later approves of that act, essentially “ratifying” it and creating an agency relationship retrospectively.
ratify means to approve to the agency relationship which was formally non existing
Explain “Agency by Estoppel”
A principal leads a third party to believe that an agent has authority to act on their behalf.
The third party relies on this representation in good faith.
The principal is estopped from denying the agency relationship.
What are the 2 different Authorities of Agents?
- Actual Authority
- Express: Written/Verbal
- Implied: Assumed (by agent’s position) - Apparent Authority
- Presumed by 3rd party
- Appearance of authority
(agent appears to have authority by 3rd party)
What is a fiduciary duty/relationship?
It is where one party (the fiduciary) is placed in a position of trust and must act solely in the best interests of another party (the beneficiary), prioritizing their needs above their own, with a high standard of loyalty and good faith in decision-making; essentially, it means acting with utmost trust and confidence on behalf of another person
What are some examples of Termination of Agency?
- Mutual termination
- When term of appt has ended (3 months exclusive concluded)
- Agent fulfilled duty
- Frustration e.g. Act of God/Acquisition (not within control of either party)
- WHen principal terminate the agent’s service
- Renunciation by Agent: When agent terminates his own service
- By operation of law (death/insanity/bankruptcy of either client or agent)
What is the difference between Implied authority and Apparent authority?
Implied authority is when the company in fact did imply that he had the authority to do this thing. Like it was implied as part of his job that the individual could do xxx for his company.
But apparent authority is when he doesn’t have the authority to do something, and is about what a THIRD PARTY thinks. A third party perceives him as apparently having authority to do xxx.
What is “Tort”?
Tort refers to a civil wrong that causes harm to another person, and gives rise to a civil remedy.
What are some examples of “Tort”?
Tort of:
- defamation
- battery and assault
- public nuisance
- trespass
- professional negligence
Explain Professional Negligence
Professional negligence happens when a professional fails to meet their obligations, which results in harm or financial loss for their client.
The Professional did not exercise reasonable care to avoid carelessness such as giving wrong info.
Parties involved can sue the agent under professional negligence.
What are the 4 points a plaintiff must prove before they can sue the defendant on tort of negligence?
- Defendant owes the plantiff a duty of care.
- He has breached this duty of care.
- The Plaintiff has suffered damages or less as a result of the breach.
- The loss or damage is not too remote.
What is the test used to determine the existence of duty of care?
2-stage test:
- Proximity
- Policy Consideration
What are the 2 criteria for proximity?
- Damge is foreseeable
- defendant should know that claimant will suffer damges from his carelessness. - Care is expected
- defendant should know that the claimant relied upon defendant to take such care.
**if both critierias not mer, there is no proximity thus no duty of care exist
What are the 3 types of Proximity?
- Physical proximity
- relationship between Public and building owner - Circumstantial proximity
- relationship between Client and agent - Casual Proximity
- relationship between Seller’s agent and 3rd party
Explain “Policy considerations” in duty of care
“Policy considerations” in the context of duty of care refers to broader societal factors that courts take into account when deciding whether to impose a legal duty on a defendant in a negligence case, even if the basic elements of foreseeability and proximity are present; essentially, it’s a balancing act to ensure that the legal system doesn’t create overly burdensome liabilities and protects important societal interests.
