Practice Chapter 4 - Agency Law Flashcards
Agency
The relationship between a principal and the principal’s agent, which arises out of a contract, either expressed or implied, written or oral, wherein the agent is employed by the principal to do certain acts dealing with a third party.
Agent
One who acts for and with authority from another called the principal.
Principal
The employer of an agent, such as a buyer or seller.
Subagent
A person upon whom the powers of an agent have been conferred, not by the principal, but by an agent as authorized by the agent’s principal.
Dual Agency
An agency relationship in which the agent acts concurrently for both of the principals in a transaction.
General Agent
An agent with full authority over one property of the principal, such as a property manager.
Single Agent
An agent who works only for the buyer or the seller.
Special Agent
An agent with limited authority to act on behalf of the principal, such as created by a listing contract.
Sub-agent
A person upon whom the powers of an agent have been conferred, not by the principal, but by an agent as authorized by the agent’s principal.
Universal Agent
The agent who has complete authority over any activity of the principal; for example, power of attorney.
Express Agency
An agency relationship created by oral or written agreement between the principal and the agent.
Implied Agency
Agency that exists as a result of the actions of the parties.
Ostensible Agency
A person who has been given the appearance of being an employee or acting (an agent) for another (principal), which would make anyone dealing with the ostensible agent reasonably believes he/she was an employee or agent.
Confidentiality
An agent is obligated to safeguard his/her principal’s lawful confidences and secrets. Therefore, a real estate broker must keep confidential any information that may weaken a principal’s bargaining position. The duty of confidentiality precludes a broker who represents a seller from disclosing to a buyer that the seller can, or must, sell a property below the listed price. Conversely, a broker who represents a buyer is prohibited from disclosing to a seller that the buyer can, or will, pay more than what has been offered for a property.
Fiduciary
A person in a position of trust and confidence, as between principal and broker; broker as fiduciary owes certain loyalty which cannot be breached under the rules of agency.
Fiduciary Duty
That duty owed by an agent to act in the highest good faith toward the principal and not to obtain any advantage over the latter by the slightest misrepresentation, concealment, duress or pressure.
Loyalty
An agent’s duty to place the client’s interest above those of all others, including the agent’s own self-interest.
Obedience
This fiduciary relationship obligates the agent to act in good faith at all times, obeying the client’s instructions in accordance with the contract.
Reasonable Care
The degree of caution and concern for the safety of himself/herself and others an ordinarily prudent and rational person would use in the circumstances. This is a subjective test of determining if a person is negligent, meaning he/she did not exercise reasonable care.
Commission
An agent’s compensation for performing the duties of agency; in real estate practice, a percentage of the selling price of property, percentage of rentals, etc. A fee for services.
