Agency Relationships and Contracts
How agency is created
Agency is a fiduciary relationship in which a principal authorizes an agent to act on the principal's behalf and under the principal's control. It can arise by express agreement, implication from the parties' conduct, ratification of an unauthorized act, or estoppel when a third party reasonably relies on the representation. Listing agreements and buyer-brokerage agreements are employment contracts: they must identify the parties, describe the property or scope of service, state the term, the compensation, and the type of agency. Know the listing menu - exclusive right to sell (the broker is paid no matter who procures the buyer, including the seller), exclusive agency (seller keeps the right to sell unrepresented), open listing, and net listing (restricted in many states because it invites divided loyalty).
Fiduciary duties and the client/customer line
Obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care. Customers receive honesty, fair dealing, and disclosure of material defects - not loyalty, not confidentiality, not advocacy.
Traps that show up in questions
Who pays the commission does not create the agency; the agreement does. A buyer's agent paid out of a listing-side cooperative offer is still the buyer's agent. Dual agency requires informed written consent from both sides and reduces the licensee to neutrality. Confidentiality continues after termination; the duty to account never ends. Teams are marketing identities, not separate brokerages. Purchase contracts need offer, acceptance, consideration, capacity, legality, and a writing for land - and earnest money is consideration for the contract, not for the property.
Worked example
A seller signs an exclusive-right-to-sell listing at 6%, then finds a buyer herself and closes. The full fee is still owed, because the broker's right to compensation is contractual, not dependent on procuring cause in that listing type.