3.1 Principles of Agency & Common Law Foundations
Key Takeaways
Rule 48 recognizes consent expressed in words or inferred from conduct. Rule 43 requires a signed written service agreement when establishing a residential client relationship.
Distinguish actual express and implied authority from apparent authority based on the principal’s representation to a third party.
Ratification depends on the principal’s adoption of an earlier unauthorized act with knowledge of the material facts and capacity for the act.
Verify the agreement, end date and signing authority if the mandate or a party’s capacity changes.
Protect former client confidences, account for entrusted money and property, and check any obligations that continue.
Identify the parties and the scope of authority
A principal authorizes an agent to act on their behalf. In a residential trade, the principal is the buyer or seller client. The agent is the brokerage in common law agency or the licensee designated in writing in designated agency. A third party is someone outside that particular relationship and may have their own agent. Rules 41, 42, 57 and 58 govern competent service, honest dealing and the duties the licensee owes in each role.
Under Rule 48, the buyer or seller expressly or implicitly consents to the licensee acting on their behalf, and the licensee consents or acts accordingly in the trade. A course of conduct can support an inference of mutual consent. Giving factual information at an open house does not by itself establish consent to representation. Recommending a particular offer and promising to negotiate for a buyer who requested and accepted that help could support an inference of agency. The determination turns on both parties’ words and conduct. Rule 43 separately requires a signed written service agreement when establishing a residential client relationship. Clarify the role under Rules 41 and 55 and sign the agreement when taking on the client.
| Authority | What to examine | Application |
|---|---|---|
| Actual express | What the principal explicitly authorized. | A seller can instruct the brokerage to list at a stated price and receive offers. Check the written mandate and the actual instruction. |
| Actual implied | What the principal’s mandate and the parties’ course of dealing reasonably imply is authorized. | Authority to market a property can imply arranging agreed showings. It does not itself authorize accepting an offer or changing the client’s price. |
| Apparent | What the principal represented to the third party, the scope of that representation and the third party’s reasonable reliance. | A representative’s own assertion of power does not ordinarily establish it. A principal’s express holding out can make the principal answer for the act, subject to applicable execution requirements and facts affecting reliance. |
Ratification is the principal’s later adoption of an act done or purportedly done on their behalf without authority. Check whether the principal had capacity for the act and adopted the transaction with knowledge of the material facts. A later instruction for a new act differs from adopting an earlier one. In a trade, if someone purports to accept or amend a deal for a client without clear authority, preserve the record, consult the broker and obtain legal advice before relying on it. Verify any legal requirements for signing or registering an instrument independently.
Confirm authority for the document being signed
Preparing an agreement, signing it for a party and receiving a notice are different acts. In an ordinary trade, the brokerage’s authorized signer signs its own service agreement. The client or properly authorized representative signs for the client. A licensee who can negotiate or receive notice under a purchase contract should obtain and verify separate authority before purporting to sign that contract for the client. Involve the broker and counsel to check the scope, required form and supporting proof. A condominium manager signing for a condominium corporation has the separate written authorization requirement under Rule 80.88(g).
| Proposed signer | Verify before accepting the signature |
|---|---|
| Personal representative of a deceased owner | Check the title and ownership form, then the grant, will or court order and who must act. Confirm with counsel how authority to sign now relates to transmission or transfer at Land Titles. |
| Trustee for property held in trust | Verify the trustee’s appointment, that the property is within the trust, and the terms, statutory powers and required approvals. Section 31 of Alberta’s Trustee Act addresses powers over property vested in the trustee. Ask counsel which trustees must approve or sign. |
| Attorney or court-appointed trustee for a living owner | Verify identity, current authority, activation and limits of the power or order. A court-appointed trustee other than the Public Trustee needs specific court permission to sell the adult’s real estate. Have counsel verify any requirement for registration or further approval. |
If a child of a deceased sole owner presents a former power of attorney, stop and verify estate authority. That instrument does not appoint a personal representative. Keep evidence of the signer’s capacity and confirm the scope for each agreement.
Alberta Trustee Act, section 31 · Alberta title changes on death · Alberta adult trusteeship
End representation and close out the file
Check the signed agreement for expiry, completion of the mandate and early termination. An early end can occur by mutual agreement or a valid contractual notice. A principal may withdraw authority, and an agent may renounce it. Any remaining contractual obligations, including agreed expenses or remuneration, require separate review of the agreement and applicable law. Rule 43 requires signed written amendments and immediate true copies upon signature. Document the end date, any signed release and the handover of records, keys and outstanding matters. The end of a listing alone does not undo a purchase contract already in effect.
A death, loss of capacity, insolvency or a change affecting the subject property calls for checking who has authority and whether the mandate can still be performed. If an owner has died, confirm who can act for the estate and verify the will, grant or other evidence with legal counsel. Section 20 of Alberta’s Estate Administration Act gives the personal representative powers over estate property subject to the will and legislation. For an incapacitated owner, verify an operative enduring power of attorney or trusteeship and its scope. An ordinary authority and an enduring instrument can operate differently on incapacity. Section 13 of the Powers of Attorney Act generally ends the enduring instrument on the donor’s death. For a designated licensee who ceases to be licensed with the brokerage, Rule 58.1(3)(b) requires the agreement to provide for a replacement designation. Review its implementation with the broker and client.
Protect former client confidences under Rule 44, the agreement and applicable privacy law. Authorized or legally required disclosure remains possible. If a proposed new assignment risks misuse of former client confidences or otherwise creates a conflict, involve the broker before proceeding and arrange independent representation when needed. Account for entrusted money and property under applicable trust rules and lawful instructions. An expired listing does not authorize releasing a purchase deposit contrary to the contract or a court order.
RECA Rules · RECA Consumer Relationships Guide · CRA policy on common-law agency · Estate Administration Act · Powers of Attorney Act · Alberta Land Titles enduring power of attorney procedure
A buyer asks a licensee to negotiate for them. The licensee agrees to seek a lower price, then communicates the buyer’s proposed terms to the seller on their behalf. No service agreement is signed. What should the broker assess?
Both parties’ words and conduct can establish agency under Rule 48. Rule 43 still requires a signed written residential service agreement.
The absence of a signature automatically makes the buyer a customer and ends the inquiry.
The licensee must hold apparent authority because the licensee told the buyer they could negotiate.
The buyer ratified a completed unauthorized purchase merely by discussing price.
A company’s director, authorized to communicate for the company, tells a supplier that the manager can order listing photographs on its behalf. The manager places an order within the stated scope. The supplier reasonably relies on that statement without knowing the company never actually granted the manager that authority. Which concept most directly explains the supplier’s position?
Actual express authority granted to the manager by the internal instructions.
Ratification because the manager made the order.
Apparent authority based on the principal’s holding out to the supplier.
Actual implied authority because all employees can bind their employer.
A listing has expired. The associate remembers the former seller’s private financial distress and minimum price. A prospective buyer wants to retain the associate for that same property. The seller has given no authorization to disclose, and no law requires it. What should the associate do?
Give the buyer the minimum because a new client receives complete disclosure.
Disclose the information after waiting 30 days.
Use the private information to recommend a bid as long as the associate leaves out its source.
Protect the confidences and review the possible conflict with the broker before accepting the assignment.
Sections you finish are checked off in the contents.