When it comes to real estate, the authority found in an agent`s contract is a critical aspect that should not be overlooked. This essential document establishes the nature of the relationship between the agent and their client or principal, including the extent of the agent`s authority to act on behalf of the principal.
There are two types of authority typically found in agent contracts: express authority and implied authority. These two types of authority help to define the relationship between the agent and principal and determine the agent`s rights and obligations in carrying out their duties.
Express Authority
Express authority is the most apparent type of authority found in an agent`s contract. It is the authority given to the agent explicitly by the principal. This can be through written or oral communication or by any other means that make it clear the agent has the power and ability to act on the principal`s behalf.
Express authority typically outlines the specific tasks that the agent is authorized to carry out, along with limitations on their authority. It is essential to note that any actions taken by the agent that exceed the express authority granted to them may not be binding on the principal.
Implied Authority
Implied authority, on the other hand, is not explicitly stated in the agent`s contract but is rather inferred from the nature of the relationship between the principal and agent. It arises from the agent`s position and the implied power necessary for the agent to carry out their express authority.
For example, if an agent is authorized to sell a property, they are also granted the implied authority to take steps to prepare the property for sale, list it with relevant channels, conduct showings, and negotiate offers with potential buyers on behalf of the principal, even if these specific actions are not explicitly stated in the contract.
Conclusion
In summary, the authority found in an agent`s contract is critical in defining the nature of the relationship between the principal and agent. It is vital to understand the types of authority granted to the agent, including express and implied authority, to determine their rights and obligations in carrying out their duties.
As a principal, it is essential to ensure that the agent`s authority is sufficiently limited to avoid any legal issues that may arise from the agent exceeding their authority. As an agent, it is essential to understand your authority and ensure you only act within its limits to avoid any unnecessary disputes with your principal.