© 2015 OnCourse Learning Texas Real Estate Brokerage and Law of Agency, 6 th Edition

TERMINATION OF THE AGENCY RELATIONSHIP © 2015 OnCourse Learning Chapter 7

How can Agency be Terminated? Agency can be terminated in many ways, but there are two ways termination of the agency relationship can be accomplished This fiduciary relationship ends either by – “acts of the parties" or by – "operation of law" © 2015 OnCourse Learning

Acts of Parties Express Agreement Statute forbids the automatic renewal of a listing agreement into perpetuity Just because employment relationship terminates does not mean fiduciary duty has terminated – Northborough v. Cushman & Wakefield of Texas, Inc. © 2015 OnCourse Learning

Acts of Parties Accomplishment of the Agency Objective – when the purpose of that agency contract has been performed. – Stortroen v. Beneficial Finance Co. © 2015 OnCourse Learning

Acts of Parties Expiration of Time – The agency can last for a reasonable period of time, not into perpetuity – Jones v. Allen Revocation by the Principal – The principal always has the unilateral right to revoke the contract © 2015 OnCourse Learning

Revocation by Principal If the agent has no interest in the property, the principal always has the unilateral right to revoke the contract – Sunshine v. Manos No one has the right to force services on a principal who doesn’t want those services – If it is unilaterally revoked, however, the agent has the ability to sue for damages © 2015 OnCourse Learning

Revocation by Principal If the agency is revoked because of breach of contract, if the principal’s best interest is served, the courts will uphold the revocation of the agency and award the agent damages – Cahn v. Pye – Brigham v. Cason If agency is revoked and licensee leaves a sign up, it could be a violation of TRELA © 2015 OnCourse Learning

Breach of the Fiduciary Relationship No restrictions at all on the revocation of the agency by the principal because of any breach of duty of care by the agent – Woodward v. General Motors Corp. Agent has no right to a commission if he or she breaches the contract In general agency, principal still liable for agent’s acts until third parties have notice © 2015 OnCourse Learning

Acts of Parties Renunciation By the Agent - The agent can renounce the agency relationship subject to the agent’s liability for damages if the principal is damaged – Walter E. Heller & Co. v. Barnes – Tatum v. Preston Carter Co. © 2015 OnCourse Learning

Termination by Operation of Law Death of Either Party: – Broker: At the death of a real estate broker, all his or her listings terminate – Principal: Before the sale of a property can take place, the will of the deceased owner must be probated Insanity of Either Party: durable power of attorney can survive insanity of either party © 2015 OnCourse Learning

Termination by Operation of Law Supervening Illegality - If the agency is legal at the inception, but a change of law makes it illegal, the agency is terminated – Centex Corp. v. Dalton © 2015 OnCourse Learning