COMMON LAW OF AGENCY
A SUPPLEMENTAL CHAPTER FOR
OKLAHOMA
REAL ESTATE PRINCIPLES
2009
DALE BAZE
PUBLISHED BY
B & B PUBLISHING
405-361-4602
Copyright © 2009 By Dale Baze. All rights reserved. No part of this book may be reproduced in any manner without written
permission.
COMMON LAW OF AGENCY
CREATION OF AGENCY
An agency is the legal relationship whereby one person, an agent, is authorized by another, a principal, to
act on that person’s behalf, and is empowered to do what the principal could lawfully do in person. The
axiom of agency is: “He who acts through other acts himself.” The principal thus assumes all the
responsibilities of the acts of the agent in altering legal relationships with third parties on his behalf. In so
dealing, an agency is formed and brings into effect the law of agency, which prescribes certain
responsibilities and liabilities to the principal and the agent. These rules of law also delineate
responsibilities, obligations, and duties with regard to dealing with third parties.
In the normal course of business, real estate licensees routinely create agency relationships. Most are
intentional through an expressed agreement, either written or oral, while others are implied by the action
of the parties. Still others may be inadvertent or accidental.
When property owners enter into listing agreements with real estate brokers to represent them in legal or
business dealings with third parties, agencies are created. The agreement defines the terms of
employment and outlines the duties and responsibilities of the agents (brokers) and the principals. At the
same time, obligations to third parties (customers) are legally established.
The principal-agent relationship is generally created by an employment agreement between the parties in
the form of a listing contract. A contract of employment is not necessary, however, for the creation of an
agency. All that is required is mutual consent, the principal...