“Hello, my name is James…James Bond and I’m…well…a real estate agent.” In the greater Vancouver area there have been a large number of famous real estate agents at any given time, at least famous by name.. In addition to James Bond and, of course, my own last name (‘Frascati’ is one of the famous wines of Italy, as well as the seventh hill of Rome), we have had Agents of the caliber of Omar Sharif, Vera Cruz, Charlie F. Brown and a certain Giuseppe Mussolini (you could see him on the street because he invariably wore a black shirt and had that certain martial…how to say…goose step…). Not to mention Yuri Gagarin (no relation to the astronaut), Carl Marx, Richard (Dick) Nixon, and, yes, Douglas MacArthur (a tough guy to get along with…) with his new friend John Yamamoto, to name a few more. . . And, faithful to the oriental tradition that characterizes this wooden neck, we have been wearing on several occasions a Ding Dong, a King Woo Kong as well as a Sing T. Sing, a Wu Win-chi Wu (which used the initials WWW) and two from Ho Chi Minh. The longest name I’ve come across is Guillermo Oreporemotichovea (but his friends called him ‘Cy’… no wonder) and the most memorable catchphrase ever adopted by a real estate agent that I know of belongs to an agent. named Bob. Bye (now missing, possibly from starvation…) who used to run newspaper ads like “List with Bob Bye – The Guy with the Tie”. However, despite the variety of names and lifestyles, all Agents, especially in real estate, must abide by the axioms of Agency Law when it comes to fulfilling their professional mandates.
An Agent is a person who is authorized to act on behalf of another person. The person for whom you act is called your Principal. Because the Agent has the authority given to him by the Principal, he can create a legal relationship between the Principal and a third party. For example, a purchasing agent may order goods from a third party on behalf of its principal, as long as the purchase is made within the scope of the agent’s authority. In such a case, the principal must pay for the goods because he is effectively bound by the agent in a contract with the third party. The agent, on the other hand, is not a party to the contract.
The relationship between an agent and his principal is created by contract. Under the Agency Agreement, the agent has authority to do certain things in lieu of her principal. In exchange for the service provided by the agent to act on behalf of the principal, the principal pays the agent a fee or commission. Agents are not employees. The distinction between an agent and an employee is the degree of control and the method of remuneration. A principal tells the agent what he wants and leaves the agent how to achieve the result. An employer, on the other hand, tells the employee what to do and how to do it. In addition, the agent is usually paid through a commission that becomes payable only when he provides the result. An employee, on the other hand, expects to be paid for the number of hours he works, regardless of whether or not the result is achieved. Real estate agents are a particular type of agents. A real estate agent acts on behalf of his or her principal, usually the Seller, but may also act on behalf of a Buyer and, in fact, may act on behalf of the Seller and the Buyer at the same time subject to certain restrictions. The contract detailing the terms and conditions of the authority vested by a Seller in the real estate agent is called a Listing Agreement. With Buyer, the name changes to Buyer Agency Agreement.
Based on the wording of the contractual agreement between the principal and the agent, the authority to act vested in the agent falls into one or more than one of the following categories. The agent’s authority to act may be Fast, implicit, by ratification, usualY apparent.
express authority
Express authority is the power granted by the agent by contract. The contract can be in writing or verbal. Real estate agents are usually expressly licensed under a Listing Agreement and, here in British Columbia, all listing agreements involving land or an interest in land (such as a lease) must be in writing to be enforceable, in accordance with the Real Estate Services Law. . It should be understood that a listing agreement is not a contract to sell or otherwise transfer an interest in a land but, rather, an agreement whereby one party (the Agent) agrees to market an interest in a land and the other party (the Director) agrees to pay a commission upon completion.
implied authority
Even when precise words are used in express authority, an agent may find themselves in circumstances where the acts they wish to perform are not covered by those words. Sometimes it is possible to imply authority from the precise words. More specifically, an agent would have implied authority to perform an act if the agent has no choice but to do so in order to comply with her express authority. For example, a real estate agent’s authority may be only to sell a certain parcel of land or a certain house for the principal of it. The agent may wish to show the property to prospective buyers during the owner’s absence. If the agent did not have the authority to do so, he and potential buyers would be trespassers and therefore liable to the owner for damages. Because the display of property is necessary and incidental to effecting a sale, the agent may imply authority proximate to his express authority, provided nothing in the contract provides otherwise.
authority by ratification
Sometimes an authority can be created retroactively. For example, where an agent enters into a contract on behalf of his or her principal but the contract is beyond the express authority of the agent, authority may be granted in the past. This is done by ratification. If the principal consents after the fact to be bound by the unauthorized acts of his agent, he has ratified the contract. The end result is therefore that the principal is bound by the contract as if the agent had been authorized in the first place.
usual authority
Customary authority arises when the principal engages an agent to act in a particular transaction and that transaction is governed by the ‘customs of the trade’. In such a case, it is considered that the principal has consented to the agent acting in accordance with such customs, provided that they are lawful and reasonable and the principal has not indicated otherwise.
apparent authority
Also, under certain circumstances, an agent may obligate its principal to a third party even though the agent is not authorized to do so. This arises when a principal has acted in such a way as to lead third parties to believe that his agent has authority to perform certain acts on his behalf. If the third party deals with the agent in the good faith belief that the agent has the authority represented, it is called apparent authority.
In general, anyone in their right mind can act as an agent, since the agent does not need to have the capacity to contract that the principal must have (see my article entitled ‘Basics of Contract Law’ for more information). As a result, a child agent (ie, a minor agent) can negotiate a binding contract between the principal and a third party. The infant agent is, however, a party to the agency contract and therefore could use her own inability to contract to repudiate the agency contract with her own principal.
Louis Frascati