This type of situation is by far the most common commercial arrangement.
For one reason or another, the Principal (P) is unable or unavailable to sign the contract directly with the Third Party (T), so an Agent (A) is used.
Think of many standard, straightforward commercial transactions which involve written contracts from buying or leasing property and cars to cellphones. The seller just cannot deal directly with everyone, so it must secure the services of an agent.
Agency law remains the same no matter what type of transaction is undertaken. But, when it comes to real estate, you will notice that only rarely is the registered real estate sales representative or the brokerage ever in circumstances where they are signing on behalf of their principal. Their duties and obligations arise under the Real Estate and Business Brokers Act, 2002; are rarely under other laws.
The usual and ordinary role for a real estate agent is to bring the two parties to the real estate transaction together. Both parties sign the transaction on behalf of themselves.
There are unusual situations in which a sales representative may also hold a power of attorney, and sign documents directly. However, the authority of the agent in such cases, falls under the power of attorney appointment, and the Attorney acts as agent under the common law, not the Real Estate and Business Brokers Act, 2002.
Quickly to summarize:
P has a contract with T
Only P and T have rights under that contract
A has no rights whatsoever under that contract
Maintaining the Restriction, Limitation and Non-Liability of the Agent
If the agent has no rights, and cannot be sued under the contract, how do we keep it that way?
Well, oftentimes, agents don’t really say they are agents or make this clear.
Assuming that Robert Jones sells cars for ABC Motors Inc., then, when Robert decides to sell a car his signature should appear as:
1) “Robert Jones” on behalf of ABC Motors Inc.
2) “Robert Jones” as agent for ABC Motors Inc.
3) ABC Motors Inc.
Per: “Robert Jones”
The term “per” is the short form for the latin “per procurationem” meaning “on behalf of”, or “as agent for”. Procurator is another word for agent.
In all three cases, Robert Jones’ position and role as an agent will be clear. The car buyer will still come back to the dealership and expect to pick up the car, even if Jones is on vacation, ill, or has left the company.
The major risk for real estate agents, sometimes is the failure to take these necessary precautions in appropriate circumstances.
Brian Madigan LL.B., Broker