Concept of Agency
Question:
Which of the following statements describes the concept of agency?
1. an agent is a representative who is expected to have greater expertise than the principal for the task to be performed
2. an agent is a representative who owes fiduciary duties to clients and customers
3. an agent is a real estate representative who is representing a principal brokerage
Answer:
- Historically, that was not true, but generally that is the case, most of the time (let’s say, 95%), today.
- No fiduciary duties are owed to Customers, only to Clients.
- This is actually true. The Sales Representative acts for (as “agent”) the Brokerage and brings Consumers into a contract with the Brokerage, whereby the Brokerage will act as “Agent” for the Client (formerly, just a consumer) .
Let me put it this way: if this were a question on a law exam, the correct answer would be #3, but, I think that Humber is looking for #1 for the 2 points on its exam.
Brian Madigan LL.B., Broker