Law of Agency Chapter 3 Quiz & Flashcards

Study Notes

Special Agency

Defined as a limited agency relationship where agents are authorized to perform specific acts on behalf of their principals.
Commonly seen in real estate between brokers and clients through listing agreements and buyer-broker agreements.
Special agents cannot bind or obligate principals to decisions; principals retain final authority.

General Agency

Involves a broader authority where principals are accountable for the actions of their agents within the scope of their duties.
The classic example includes the relationship between brokers and their sponsored salespersons.
Brokers serve as principals while agents represent brokers in client interactions, thereby fulfilling fiduciary duties.

Universal Agency

Represents the broadest type of agency relationship, allowing agents to act and make decisions on behalf of principals.
Typically established via a power of attorney, granting agents the ability to sign legal documents for the principal.
Rarely occurs in real estate except when a principal overseas gives an agent a general power of attorney.

Power of Attorney

A legal instrument allowing one individual to act on behalf of another person.

Agency Classifications

Three primary types exist:
- Special Agency (broker-client)
- General Agency (salesperson-broker)
- Universal Agency (child-parent as executor of a will)

Broker-Salesperson Dynamics

Agency relationships are formed at the broker level; hence, when a client signs with a salesperson, they are actually agreeing to terms with the salesperson's broker.
All agents sponsored by a broker owe fiduciary duties to clients, ensuring collective responsibility.

Implications of General Agency

Brokers are responsible for sponsored salespersons’ actions, reinforcing the need for clear policies and training regarding authorized activities.
A salesperson's scope of activities is determined by the brokerage’s established policies.

Property Management Exception

Property management involves ongoing responsibilities requiring a general agency agreement, which provides broader authority than typical special agency agreements.

Summary of Relationships

Special agency is referred to as limited agency due to its narrow scope.
General agency enables agents to act more autonomously but holds brokers accountable for their actions.
Universal agency grants the most extensive powers, generally reserved for specific scenarios.

Description

Explore the concept of special agency in this quiz, focusing on its definitions, roles, and common examples, particularly in real estate. Understand the limited scope and authorization of agents as outlined in Chapter 3 of the Law of Agency.