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25 Cards in this Set

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What does the term Agency mean?
Agency is the relationship arrising when one person THE AGENT is appointed to act as the representative of another person THE PRINCIPAL.
What is the role of the AGENT?
The agent is appointed to find and enter into a contract with a THIRD party on behalf of the principal.

This brings the principal into a contractual relationship with the third party.

Letting Agents are TRUE agents who conclude all legal work.
What are the 4 ways in which an agency relationship can be established?
1. Express appointment
2. Ratification
3. Estoppel
4. Implication of the law
What is Express Appointment?
This is the most common way to establish an agency relationship. Done through a contract with the AGENT and PRINCIPAL. The normal rules of contract apply - OFFER, ACCEPTANCE and CONSIDERATION.
Where is the authority of the agent usually outlined?
Within the agency agreement. If the agent steps outside this authority there is a possibility of being sued for breach of contract.
How does agency formation by ratification come about?
A person (principal) rattifies (approves & adopts) an act which has already been done in his/her name by the Agent who in fact had no actual authority to act (but was pehaps holding out to have authority) in the principals name when the act was done.
Four conditions need to be satisfied to have effective ratification, what are they?
1. The principal must be named and identified by the agent.
2. The principal must actually exist and have contractual capacity.
3. When the principal ratifies, it must be with full knowledge of all the facts
4. A void contract can not be ratified.
What is Agency by Estoppel?
This is implied appointment.

A legally binding relationship that may arise where, in fact, no formal agency agreement is in effect. A principal may give an appearance of an agency relationship.

In such cases the existance of the agency can be presumed and the principal may be bound by the acts of the agent performed on the principals behalf.
What is Agency by Necessity?
This would arise where there is great urgency and in order to preserve the property the agent MUST act on behalf of the principal.

this only arises when it is practically impossible for the agent to communicate with the principal before the agent acts on behalf of the principal.
What are the 3 categories of authority that an agent may act under?
1. Actual authority
2. Apparent authority
3. Usual authority
What does ACTUAL authourity of the agent mean?
And how is the agent bound by that authority?
The actual authority of the agent is usually set in the contract of agency and defines what the agent can and can't do.

If the agent acts within the authority given to them, this will bind the principal to any contract made.

If the agent exceeds the authority given, the principal will not be bound and this could lead to the agent being sued for breach of contract.
What is APPARENT authority?
This is the authority an Agent appears to have to a third party.
What happens if the agent exceeds the actual authority given to them?
They could be sued for:
~ breach of contract by the principal
~ breach of warrenty of authority by the third party

The agent should have authority to agree any promises made to the tenant regarding a new let.
What is USUAL authority?
This is where there is no record of the actual authority that has been given to an Agent (e.g. telephone)
The agent will still be able to act on behalf of the LL and will be able to bind a LL to any lease that is signed.
Why will common law regard the agent as having the USUAL authority of a letting agent?
Because it is usual for an agent to conclude a lease on behalf of a LL, any lease so concluded with a tenant will be binding on the LL, as long as the terms of the lease are normal.
What are the common law DUTIES of the agent?
• to act honestly in the interests of the principal
• not to allow a conflict of interest to arrise
• to carry out instructions lawfully
• to exercise reasonable skill and care
• not to take a secret commission or profit
• to keep information confidential
• not to delegate the agency to others without the principls permission
• to give principal particulars of the agency contract
• to account to the principal all monies
What are the three D's that the agent owes the client?
• duty of care
• duty of loyalty
• duty to account in full
Discuss the term DUTY OF CARE.
This covers the duties of the agent to be honest, loyal and act with reasonable skill and care and to ensure that there are no conflicts of interest.
What do the terms skill and care refer to?
This covers:
• knowledge - law, health and safety, repair obligations, rent arrears and possession

• performance - finding tenants, viewings, referencing, inventories.
What does the term DUTY OF LOYALTY cover?
This covers matters of conflicts of interest.
• any conflict should be disclosed to the client as soon as it arrises.
• this is a common law requirement and requirement of other professional bodies such as NAEA.
The term DUTY OF LOYALTY also covers agency appointment - what does it state?
It states that agency appointment is a personnal appointment and it is NOT possible to delegate this responsibility to others without the permission of the principal.
What does the agents DUTY TO ACCOUNT cover?
Accountability is linked to honesty and loyalty. As letting agents usually handle money on behalf of clients it is imperitive that the agent can account to the LL all monies.
What does the term secret profit or commission mean?
Any additional sources of income derived from the agency function should be disclosed to and agreed with the principal at the onset of the relationship.

It is not ethical to benefit from trades people to use their services on behalf of the principal.
What are the DUTIES of the principal?
• to pay commission - if the agent fulfils the contract of the agency the principal is under duty to pay the agreed commission.
• indemnify the agent - against all liabilities incurred in the execution of the agency contract. This is not unlimited!

Only extends to the situation where the agent is acting with the authority given in the agency contract and when carrying out lawful instructions.
How may an agency contract be TERMINATED?
• a spoken/written agreement between the agent and the principal
• completion of the purpose for which the agency was created
• repudation by the agent of the principal (but this may give rise to damages for breach of contract)
• any method stipulated in the contract of agency e.g. notice in writing
• death of the principal
• bankruptcy of the principal