Definition. An implicit agency in real estate is an agency created on the basis of the behavior of the client and the broker. It can be difficult for a real estate agent to collect a commission on sales resulting from unspoken agencies, as there is no written agreement on commissions. The principles underlying a tacit contract are that no person should receive unfair benefits at the expense of another person and that no written or oral agreement is required to obtain fair play. For example, the tacit guarantee is a kind of tacit contract. When a product is purchased, it must be able to perform its function. A new refrigerator must remain refrigerated or the manufacturer or seller has not complied with the terms of a tacit contract. Another example of implied authority is an employee who wears a badge or business card with a company logo. This person has an implicit authority.
Customers or potential customers believe that the employee is empowered to act on behalf of the company, and that is what they do. A tacit contract can also be created by the behaviour of the parties so far. For example, a teenager offers to walk a neighbor`s dog and is rewarded with two movie cards. On three other occasions, the teenager comes to walk the dog and receives two movie cards. But on the last occasion, the neighbor does not produce the cinema cards. The teen has a case of the neighbour having established an unspoken contract by regularly producing movie tickets in exchange for dog walking services. That`s a reasonable assumption. Where the agent has real or manifest power, the agent is not held responsible for the actions of that authority, as long as the relationship between the Agency and the identity of the awarding entity has been revealed.
However, if the Agency is not disclosed or partially disclosed, the agent and the adjudicating entity are liable. If the client is not bound by the fact that the agent has no real or apparent power, the alleged agent is liable to the third party for breach of the implied power of attorney. In Watteau v Fenwick, Lord Coleridge CJ on Queen`s Bench accepted Wills J.`s opinion that a third party could personally incur liability for a sponsor he did not know about while selling cigars to an agent acting outside his authority. Wills J. stated that “the client is responsible for all the agents` actions that are generally entrusted to an agent of this type, regardless of the restrictions imposed between the captain and the agent of that authority.” This decision was strongly criticised and questioned, although it was not completely overturned in the United Kingdom.