Exhibit A
Understanding Dual Agency
THE AGENCY RELATIONSHIP
Business Brokers work within a legal relationship called agency. The agency relationship exists between you, the principal, and your Business Broker, the company under which the individual agent who is representing you is licensed with and working for.
The essence of the agency relationship is that the Broker has the authority to represent the principal, in dealings with others. Brokers and their Company are legally obligated to protect and promote the interests of their principals as they would their own.
Specifically, the Broker has the following duties:
- Protect the principal’s negotiating position at all times, and disclose all known facts which may affect or influence the principal’s decision.
- Broker has an obligation to the principal to:
a. Perform all assigned duties;
b. Undivided loyalty;
c. Protect principal;
d. Obey all lawful instructions given by the principal;
e. Maintain confidentiality;
f. Exercise reasonable care and skill in all dealings; and
g. Account for all money and property placed in a Broker’s hands while acting for the principal.
You, the client, can expect competent service from your Broker, knowing that the company is bound by ethics governed by the International Business Brokers Association, Ontario Real Estate Association, the Better Business Bureau, the Canadian Real Estate Association Code of Ethics, the National Equipment and Business Brokers Institute Code of Ethics, the Sunbelt Code of Ethics and the law, to be honest and thorough in representing a business entrusted for sale. Both buyer and seller can be represented by their own Brokers in a single transaction as in most real estate cases or as in most cases in business transactions where both the buyer and the seller are represented by a single Broker and or Company. This is called a Dual Agency Relationship.
UNDERSTANDING DUAL AGENCY
In a dual agency relationship, both parties consent, in writing, to this agency relationship. Such disclosure is required under the Real Estate and Business Brokers Act of Ontario.
This relationship involves the following obligations:
- The Broker will deal with the buyer and the seller.
- The Broker will have fiduciary duties to both the buyer and the seller.
The Broker will have a duty of disclosure
- the Broker may disclose that the buyer is willing to pay a price or agree to terms other than those contained in the offer, or that the seller may be willing to accept a price or terms other than those published or contained in a counter offer;
- the Broker may disclose the motivation of the buyer to buy or the seller to sell;
- the Broker may disclose personal information about the Buyer or Seller to the other.
- the Broker may disclose to the buyer defects about the physical condition of the business or property known to the Broker.
In summary, Dual Agency occurs when a Broker or Agent is representing both the buyer and the seller in the same transaction. The Broker or Agent has promised a duty of confidentiality, loyalty and full disclosure to both parties simultaneously.
