Chapter 15: Trading and Agency Realtionships

REBBA Consists of statute and 6 regulations. REBBA doesn't refer to term - agency. 

GEN - General, Ontario Regulation

OTH - Education req., insurance, records and other matters, ON regulation.

Trading Exemptions - auctioneer, full time salaried employee, solicitor, residential tenancies. 

Agency Relationships - agent represents the principal in dealing with third party. Relationship is documented using the representation agreement. 

The principal has 2 duties: 

• Indemnification - the principal is obligated to compensate the agent for liabilities.
• Remuneration - payment for services. Remuneration is set out in representation agreement. 

Third party - individual who is not directly connected with a legal transaction, but may be affected by it. 

Broker - middleman who acts for others in negotiating contracts. Synonymous to agent. 

Relationship Key Elements: 

1. the relationship is creation of law. 
2. the relationship is consensual (parties are consent).
3. the control of conduct rests within the principal. The agent must obey principal rules. 
4. the relationship is fiduciary in nature. The agent becomes a fiduciary in the eyes of the law and must act at principal's best interests. 
5. The agent may affect principal's legal position.

Limits on Brokerage Authority:

• Contract - brokerage and reps can't sign contracts on behalf of the principal.
• Delegation - to use other brokerages in the marketing selling process is not permitted.
• Purchase Price - brokerages can only receive a deposit relating to the purchase. 
• Expense - cannot incur expenses on behalf of the principal. 

Agent's Duties to Clients - a duty of care is owed to clients for everything that is done for clients. 8 general obligations applied to brokerages: 

1. Exercise Care and Skill - posses skills and knowledge to perform services. Completeness and accuracy of information. 
2. Negotiate Favourable Terms - assisting principal in negotiations and drafting terms and conditions for agreements. 
3. Maintain Confidentiality - all info from the client must be kept confidential.
4. Disclose Information 
5. Ensure Honesty 
6. Act in Person 
7. Obey Instructions - instructions of the principal.
8. Perform Mandate - as set out in representation agreement.

Fiduciary Obligations - written agreement is not req. 5 obligations: 

1. Maintain utmost loyalty - best achieved by representing interests of 1 party.
2. Avoid conflicts of interest - multiple representation for example.
3. Disclose conflicts - failure to openly disclose conflicts can give rise to registrant liability.
4. Not make secret profit.
5. Not misuse confidential information.

Regulatory Obligations: 

1. To Account - agent's resp. to account for and safeguard money, docs and property entrusted. Proper record keeping. 
2. Remuneration Provisions. 
3. Not to Induce, Breach or Make Certain Proimises - no promises unless they are written and signed.
4. To Deliver Agreement, Offers and Statements.
5. Agency relationships / Forms.
6. Disclosure: representative capacity - brokerage and reps must provide info as early as possible and before entering in agreement.

Principal Duties to Agent:

1. Indemnify - reimbursement for expenses incurred. The principal must compensate the agent for loss or damage.
2. Remunerate 
3. Obligations in the agreement

Agency relationship can be written or implied.