An agent is someone who
-is employed by another person
-has the legal authority to act for that person
-has the authority to exercise some degree of
... [Show More] discretion while acting for the other person
Some examples of agents include:
-a real estate broker acting for a homeowner to sell a home.
-a lawyer representing a client
-an investment manger who invests someone else's money.
Principal
The person who hires or appoints an agent to act on his/her behalf.
Agency
is the name for the relationship between the agent and the principal
For example, when a real estate broker obtains a listing to sell a home, he/she has an agency which allows him/her to act for the homeowner.
NOTE: The term "agency' does not refer to a business but to the relationship between the agent and the principal
Three major types of agencies
universal
general
special
Universal Agency
In a universal agency, the agent is given the legal authority to transact matters of ALL types for the principal . Universal agencies are extremely rare and frowned on by the courts because the agent's powers are so broad.
One of the few examples of this type of agency has become more visible recently in professional sports. Many athletes are hiring universal agents who have the authority to:
-negotiate salary with a team owner.
-select and manage all the player's investments
-negotiate endorsement contracts
General Agency
The second type of agency is a general agency.
This is one in which the agent is authorized to act for the principal in a specific business or trade.
Some examples include:
-a real estate salesperson who is a general agent for the broker in the real estate business.
-a property manager who manages property for the owner
-a sales representative in any field who sells products for a company.
Special Agency
The third type of agency is a special agency.
In a special agency, the agent is authorized to perform a specific act or transaction.
Some examples include:
-a real estate broker who is authorized to sell a home.
-a person who has power of attorney to sign a deed for someone.
Creation of an Agency
For a valid agency to be created, the objective (purpose) of the agency must be legal.
Also, the principal must have contractual capacity, meaning:
-He/she must be legally competent.
-He/she must be of legal age (18 in Georgia)
The agent is NOT required to have contractual capacity, meaning:
-He/she must be legally competent, but
-He/she is NOT required to be of legal age.
Therefore, a minor may be an agent in a contractual agency, but a minor cannot be a principal.
NOTE: It is not necessary that an agent be LICENSED in order to create a valid agency relationship. A REAL ESTATE agent must be licensed, but not all agents must be licensed.
An agent may be appointed (or hired) by
written contract
oral contract
implication
The importance of the agency's purpose may determine the method used.
In real estate, an agency's relationship between a broker and a seller is created through a contract called a "listing agreement".
Most states require that at least some types of listing contracts be in writing.
In Georgia, different requirements exist for different types of listing agreements.
These will be covered next.
Listing Agreements
The real estate listing is a type of contract that establishes an agency relationship between an agent and a principal.
The agent is the broker
The principal is the seller. (The buyer would be the principal under a buyers agency agreement, which is another type of agency contract in real estate. WE will not cover buyers agency agreements in this lesson.
Three types of listing agreements
Exclusive right to sell listing
Exclusive agency listing
Open Listing [Show Less]