Agency Relationships and Contract Law
Who represents whom, and what makes a contract enforceable
Agency is created by express agreement, implication, ratification, or estoppel. In North Dakota, licensees disclose agency status in writing at the first substantive contact and document the relationship - a written listing agreement or buyer-broker agreement. The fiduciary duties are commonly memorized as OLD CAR: obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care and skill. A broker is responsible for a salesperson's acts within the scope of the licensee's employment.
Types of representation. Seller's agent, buyer's agent (often paid through a cooperating compensation arrangement), dual agency (both sides, permitted only with the informed written consent of both), and designated agency, where different licensees in the same brokerage represent different parties. Ministerial acts - showing a home, providing public data, preparing documents at a client's direction - do not by themselves create an agency.
Contract essentials. Offer, acceptance, consideration, capacity, lawful purpose, and mutual assent. Real estate contracts must satisfy the statute of frauds: written, signed by the party to be charged, and containing the essential terms (parties, price, property description). A counteroffer terminates the original offer; a revocation must be communicated before acceptance; an option keeps an offer open for a stated period.
Trap: assuming an agency exists because a licensee was helpful. Helping is not representing. Another trap is treating an acceptance that changes a term as an acceptance - any change is a counteroffer.
Rule of thumb: agency equals consent plus control plus fiduciary duty. Without a signed buyer-broker agreement, the licensee likely represents the seller or no one.
Worked example: Buyer offers $300,000. Seller counters at $310,000. Buyer then mails an acceptance of the original $300,000 - there is no contract, because the counteroffer killed the original offer.