Gratuitous Agency
Definition
An agency relationship where the agent agrees to act on behalf of the principal without receiving compensation.
Example
A licensed agent helps a family member sell their home without charging a commission. Despite not being paid, the agent still owes full fiduciary duties including disclosure, loyalty, and reasonable care.
Exam Tip
The key exam point: NO compensation does NOT mean NO fiduciary duty. A gratuitous agent still owes OLD CAR duties. An agent cannot claim "I wasn't being paid" as a defense for breach of duty.
Related Agency Terms
Agency Relationship
A legal relationship in which one person (the agent) is authorized to act on behalf of another person (the principal) in business transactions with third parties.
Fiduciary Duty
The highest legal obligation of trust and confidence owed by an agent to their principal, requiring the agent to act solely in the principal's best interest.
Dual Agency
A situation where a single agent or brokerage represents both the buyer and the seller in the same real estate transaction.
Designated Agency
An arrangement where a brokerage assigns separate agents within the firm to represent the buyer and seller in the same transaction, allowing each client to have dedicated representation.
Transaction Brokerage
A non-agency relationship where the broker facilitates a real estate transaction without representing either party, owing limited duties of honesty, fairness, and competence to both.
Agency by Estoppel
An agency relationship created when a principal's actions or words lead a third party to reasonably believe that an agent has authority, and the principal fails to correct this belief.
Frequently Asked Questions
Test Your Agency Knowledge
Practice with exam-style questions to make sure you can apply Gratuitous Agency and other agency concepts.