Question

How is an agency relationship created? Under Louisiana law, discuss how an agency relationship (mandate) is created citing the pertinent Louisiana articles of the Civil Code. Discuss in detail.

Answer 1

Under Louisiana law, the law of agency is related to real estate and is governed by the section LSA-RS 9:3891-3899.

As per the section 3891 where the definitions of the various terms associated with the agency relationship are provided, agency means a relationship between the brokers of the real estate represent as a client for the transaction of the immovable property. Broker is a person who is licensed by the Louisiana real estate commission as a real estate broker. Client is a person one who appoints the broker for dealing in his immovable property.

Following are the ways in which agency relationship is created:

1. Relationship between the broker and the persons:

The broker engaged in the real estate transaction shall be representing the person for whom he is working as an agent. This relationship of the broker and the persons is governed by the section 3892 of Louisiana law.

2. Relationship between the client and the broker:

Client is a person who is the owner of the immovable property who wants to lease or sell the property. For selling or leasing the property, client appoints a broker who represents the client while dealing with the customer. Relationship between the client and the broker is defined in terms of the duties and the obligations which the broker is supposed to follow while conducting the transaction for the immovable property. This relationship of the client and the broker is governed by 3893 section of Louisiana law.

3. Relationship between the broker and the customer:

A broker is supposed to act as a bridge between the client and the customer and should provide the correct information about the immovable property to the customer who wants to purchase the immovable property or lease the same. This relationship of the broker and the customer is governed by 3894 section of Louisiana law.

4. Termination of agency relationship:

There is a written contract between the client and the broker which specifies when the agency relationship between the client and the broker will terminate or expire after which the broker does not owe any binding to the client. Termination of agency relationship is generally after the completion and execution of promise made by the broker to the client in the written contract. The termination of agency relationship is governed by the section 3895 of Louisiana law.

5. Compensation and the associated agency relationship:

The client is liable to pay the brokerage fees to the broker as per the written contract. However, the payment or the promise of payment doesnot determines whether an agency relationship has been created. This is governed by the section 3896 of Louisiana law.

6. Dual agency:

Dual agency is where the broker act as a broker for the client as well as the customer, unless the situation where the client is himself a broker or the broker is himself a customer. Various duties of the broker in dual agency relationship is governed by the section 3897 of Louisiana law.

7. Sub agency:

Sub agency is a form of agency relationship where broker act as a sub agent of a client’s client or of a client broker’s broker. This type of relationship is always created in the form of written contract and the section which governs this agency relationship is 3898 of Louisiana law.

8. Vicarious liability:

As per this section, client will not be held liable to the omission or provision of the brokerage services for or on behalf of the client. Vicarious liability is governed by 3899 section of Louisiana law.