Question:
Could you explain the difference between express and implied agency?
Answer:
You are concerned about the express and implied agency arrangements.
For express agency, there’s always an actual “agency appointment”. It may be written or it may be verbal. Usually, it starts out as a verbal commitment and then it is reduced to writing afterwards.
For example, a Sales Representative is approached by a prospect at an Open House. They speak on Tuesday evening the prospect is seeking “an agent”. The Sales Representative agrees, sends some listings over the next few days and meets with the individual on Saturday to view some houses. At that point, they sign a Buyer Representation Agreement. In this case, the agency appointment took place on Tuesday, later it was formalized and reduced to writing.
For implied agency, we have basically four situations in which that might arise. It’s important here to be aware of the fact that there’s “no paperwork” and figuring out the exact time of commencement may be difficult. However, once the interaction between the Principal and Agent continue over a period of time, it will be possible to determine from the facts, that there has been and implied agency created.
The four methods to establish implied agency are:
- Estoppel,
- Ratification,
- Necessity, and
- Conduct.
Briefly, with estoppel, the Principal acted as if the agent was his agent and is later precluded from denying this fact. With ratification, the Principal comes along after the fact, likes what the agent did, ratifies the agent’s conduct, thereby creating an agency appointment. Necessity is rather rare, but it does arise on occasion. Conduct undertaken by the registrant which crosses over the boundary between information and advice will be sufficient to create an agent relationship.
Brian Madigan LL.B., Broker