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Professional Standards Manual

Trading Services

1. Practice Standards

(b) Agency - View Entire Section

(IV) How an Agency Relationship Is Created

An agency relationship may be created by means of a written contract, orally or by conduct.

Where the client is the seller, typically the listing contract establishes the agency relationship. As indicated above, a licensee has a duty of undivided loyalty to a client. However, it is common for a licensee to act for more than one seller at a time and to act for more than one buyer at the same time they act for sellers. Therefore, the duty of undivided loyalty is typically limited in order to permit the licensee to act on behalf of other buyers and sellers at the same time. In order to do this without breaching their obligations, the service agreement should include limitations on the duties that the licensee will owe to their client. The British Columbia Real Estate Association standard form Multiple Listing Contract contains the limitations that permit licensees to conduct business with multiple sellers and buyers concurrently without being in breach of their duties to their clients.

When representing buyers, some licensees use an Exclusive Buyer’s Agency Contract. Where such a contract is used, the contract sets out the terms of the agency relationship. If a written contract is not used, the party to the trade may orally agree that the licensee is the client’s agent. Where the agreement is oral, the licensee should obtain the client’s agreement that they are permitted to act for other buyers and sellers and that they will not disclose confidential information obtained through other agency relationships.

In some cases, however, the courts have found that an agency relationship has been created as a result of the conduct of the parties. Such agency relationships are often referred to as ‘‘implied agency’’. A licensee acting on behalf of a person who is not otherwise represented may be found to be acting as the party’s agent if their actions would lead the party to believe that the licensee was acting as their advocate. An implied agency relationship may be found to exist, even where the licensee did not intend to act as the party’s agent. In any transaction which involves an unrepresented party, if the licensee does not intend to act in an agency relationship, it is very important for that licensee to confirm with that party that he or she is being treated as a customer, not a client. It is also important that the conduct of the licensee is consistent with such statements.