Lesson 7: Creation and Termination of Agency

A corporation found guilty of a violation of the Sherman Anti-Trust Act is subject to _______. A fine of $1,000,000 A fine of $100,000 A fine of $1,000 Nothing

1 Mil Feedback: Under the Sherman Anti-Trust Act corporate entities face fines as high as $1 million. In addition, the party who committed the violation may owe civil damages to any injured parties.

A listing term ended last week. The agency relationship has been terminated by _______. Revocation Renunciation Expiration Mutual agreement

Expiration Feedback: All listing agreements and buyer rep agreements must have a definite expiration date. This by an action of law.

Real Estate license holders sometimes decide to represent family or friends without charging them a fee. Should their broker be concerned about liability? Since there is no fee, there is no real risk for the agent or their broker. Agents should have all terms and expectations in writing to limit their liabilities. A court would not hold an agent liable when they were just trying to help. The broker will not need to be concerned.

All terms and expectations in writing to limit their liabilities Feedback: Even though no payment changes hands, the agent is still held to all responsibilities, liabilities, duties and obligations of an agency relationship. As with every other agency relationship, it is highly recommended that the agent have all terms and expectations put in writing. Brokers are responsible for acts of their agents.

An example of extinction (destruction) of subject matter is: The principal becomes bankrupt. The agent fulfills the terms of the agreement. The relationship reaches its expiration date. The house involved in the transaction burns down.

Burns down Feedback: If the subject matter of the relationship (the Listed Property) ceases to exist or is destroyed by fire, tornado or other disaster, the agency relationship is dissolved. The listing agreement is terminated.

Seller A and Agent A mutually decide to end their agency relationship. Which duties does the agent continue to owe the seller? Good faith and reasonable care Confidentiality and accounting Confidentiality and good faith Good faith and accounting

Confidentiality and accounting Feedback: After the agency relationship has been terminated, the agent must still maintain confidentiality to the principal unless required by a subpoena or court order to disclose that information. The agent also continues to owe the principal the duty of accounting, if necessary.

Under the common law, an agency relationship can be ended by action of the parties or by events. The three methods by which the parties can end the relationship include all of the following EXCEPT: Revocation Renunciation Mutual agreement Expiration

Feedback: Because agency relationships must be consensual, both parties (or either party) may choose to end the relationship at any time. This is called termination by action of the parties.

Buyer D decides to end his or her agency relationship with Agent D. All of the following statements are true EXCEPT: Buyer D must wait for their agency relationship to expire. Buyer D must give Agent D written notice of the revocation. If Buyer D has breached the terms of the buyer representation agreement, he or she may be liable for damages to Agent D. Buyer D may fire Agent D at any time.

Feedback: The client (the principal) may, at any time, fire the agent. The client must give written notice of the revocation, and if the client breaches the terms of the contract he or she may be liable for damages. (Note: The TAR listing agreement says that if the agent has produced a ready, willing and able buyer, the commission has been earned.)

When an agent decides to leave an agency relationship, it is said to be termination of the agency relationship by _______. Revocation Mutual agreement Fulfillment of purpose Renunciation

Renunciation Feedback: The agent may, at any time, decide to leave an agency relationship. The agent must usually give written notice of the renunciation, and the agent could be liable for damages if the contract is breached.

Two Brokers decided it only made sense to them for each to focus on different market areas. Broker A agreed to only work in the north part of the city and broker B agreed to only work in the southern part of the city. They each told their agents which section of the city was theirs. Were they in violation of any laws? Price fixing Allocations of customers or markets Boycotting Nothing, they have a right to make that decision

allocations of customers or markets Feedback: If two or more brokers agree to divide a market area up so that each broker only covers a certain segment of that market area, the allocation of these segments is illegal because it restricts open-market competition.