Law of Agency
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Is based on the Latin maximQui facit per alium, facit per se, which means, “He who acts through another is deemed in law to do it himself.”
law of agency
Gets its authority from the customs that originated from pre-colonial England, the laws that were common, and from the subsequent judgments and case law that have enforced and re-affirmed the customs.
Common law agency
Is drawn from the statutes and rules created by various legislative and governing bodies. These rules directly affect and regulate agency relationships. Regulations regarding Texas real estate agency representation are located in Section 1101 of the Texas Occupations Code known as The Real Estate License Act (TRELA) and in the Rules of the Texas Real Estate Commission (TREC) found in Title 22 of the Texas Administrative Code (TAC).
Statutory law agency
The agent is a person who has the authority to act on the behalf of another, representing the business interests of that person. The principal is a person who gives authority to an agent to represent his or her interests in dealing with third parties. A third party is a person who may be affected by the terms of an agreement but who is not a part of the agreement. The principal hires the agent to perform a service and gives the agent authority to act for or on behalf of the principal. The agent is in a position of trust with the principal and owes the principal certain fiduciary duties. This creates a fiduciary relationship between the agent and the principal.
Roles in Agency Relationships
Is a relationship in which a principal delegates ongoing tasks or duties to an agent under his or her employ. A general agent is authorized by a principal to perform all tasks associated with the continued operation of a particular project.
Is a relationship in which a principal delegates limited tasks or specific duties to an agent under his or her employ. A special agent is sometimes referred to as a limited agent because this is the most restricted agency relationship. A special agent is a person employed to perform a particular task or transaction for a specified amount of time. An attorney hired for a specific purpose would be a special agent.
If the agency relationship is described in a written agreement, it is called actual authority. A principal is not responsible for the acts of the agent if those acts are beyond the agent’s actual authority. If the relationship is created through words or actions, without actual authority, an implied agency relationship is created. An implied agency is one that is created and performed without written agreement, but through words, actions, inference, and deduction from other facts.
Establishing an Agency Relationship
Also known as ostensible agency, is created when a principal causes a third party to believe another person is the principal’s agent. Ostensible means apparent; therefore, if someone from the public believes an agency is in place between two parties even though the relationship does not exist, an agency by estoppel or ostensible agency could exist. If the principal does not give the agent written or implied authority to do the act, a third party cannot hold the principal responsible.
Agency by estoppel
Authorizes the agent to do certain specific acts. The agent is then known as an attorney-in-fact under a limited power of attorney.
special power of attorney
Allows the agent to transact all the business of the principal (within the agreed upon area). However, this is not common in real estate transactions.
general power of attorney
In a real estate agency relationship, a general agency exists between the agent and his or her salespeople. By definition, an agent is anyone who acts on behalf of another. Though a salesperson can and does act on behalf of a client, the formal relationship is with the broker.
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