Creating agency, how compensation is set, and antitrust

Creating the relationship

Agency concerns representation; compensation concerns payment. The payer does not necessarily become the client. Express agency arises from stated agreement, oral or written. Implied agency arises from conduct showing mutual assent. Ratification is a principal's informed adoption of an initially unauthorized act performed on the principal's behalf. Estoppel may prevent denial of apparent authority when the principal caused reasonable third-party reliance. These principles do not replace applicable writing requirements, licensing restrictions, or disclosures.

New York disclosure and authority

For residential transactions covered by Real Property Law § 443, the agency disclosure form is not a contract. A listing agent presents it before a listing agreement; a buyer's agent presents it before a representation agreement. A seller's agent presents it to a buyer at first substantive contact. Acknowledging receipt does not itself employ the broker. Under 19 NYCRR § 175.10, owner authorization is required before offering property for sale or lease.

Negotiating and receiving compensation

Compensation is negotiable, with no legally prescribed standard commission. Parties may negotiate a percentage or flat fee and the conditions for earning it. Payment alone does not determine representation. Under New York Real Property Law § 442-a, a salesperson receives compensation for licensed services from the sponsoring broker. Under 19 NYCRR § 175.7, a broker must clarify whom the broker represents and obtain the client's full knowledge and consent to compensation from more than one party. Consent to that payment arrangement differs from informed written consent to dual agency.

Three lanes separate representation, payment, and competition. Agency asks whose interests the broker represents under the authority and agreement. Compensation follows negotiated terms and the lawful payment path. Competition requires independent fee decisions, without a price agreement among competing firms. — Representation, payment, and competition require separate analysis.

Preserve independent competition

Federal antitrust law applies in New York. Competitors must not agree to fix prices, allocate markets or customers, rig bids, or conduct an unlawful group boycott. A firm may independently decide its pricing policy; competing firms may not agree on a minimum commission. Describing a price-fixing agreement as customary or voluntary does not make it lawful.

For each scenario, identify the principal and authority, trace the compensation, and check for an agreement among competitors.