Creation and termination of agency

Creating agency

Agency involves a principal's authorization for an agent to act on the principal's behalf and subject to the principal's control. Identify the client, the scope of authority, and its duration. The source of compensation does not by itself identify the client.

Express agency arises from an agreement stated in words, such as a listing or buyer representation agreement. Under general agency principles, the words can be oral or written. Implied agency is inferred from conduct showing mutual consent to representation. Providing information or being friendly alone does not establish it. Applicable law may require a writing for particular brokerage services or compensation rights; general agency concepts do not replace those requirements.

Ratification is a principal's informed adoption of an unauthorized act previously performed on the principal's behalf. Estoppel can prevent denial of agency when a person's conduct causes reasonable, detrimental reliance on the appearance of agency. Apparent authority depends on manifestations attributable to the principal, not an agent's unsupported claim.

Ending agency

The parties can terminate by mutual agreement. A principal can revoke authority; an agent can renounce it. Ending ordinary agency authority may still breach a contract and create financial liability. Authority and compensation rights are separate issues.

Agency can also end by expiration of its agreed term, completion of its purpose, or operation of law. Ordinary examples include death of an individual principal or agent, loss of required capacity, destruction of the subject property, or a legal change making performance unlawful. A temporary property problem is not necessarily destruction. Acceptance of an offer is not necessarily completion of all promised services.

After termination

Confidentiality and accounting obligations can survive. Return and account for entrusted funds and property. Address notice to third parties who might rely on continuing apparent authority. For exam questions, identify the event ending authority, then analyze surviving duties and any contractual liability separately.