What is the consequence of a licensee acting outside their authority in an agency relationship?

In an agency relationship, a licensee is expected to act within the scope of their authority as defined by their broker and the terms of the agency agreement. When a licensee acts outside of this authorized scope, it can lead to significant legal implications, including the possibility of being sued for breach of contract. This is because the actions taken outside of their authority can create obligations or liabilities that the principal (the client) did not agree to, thus violating the terms of the agency relationship.

For instance, if a licensee makes decisions about a property or negotiates terms that were not authorized by the broker or without the client's consent, they may be held liable for any resulting damages or losses. In such cases, a court may determine that the licensee acted beyond their employment authority, and thus they could be found in breach of their contractual responsibilities.

This accountability reinforces the importance of adhering to the defined scope of authority in an agency relationship to avoid legal and financial repercussions. Therefore, being sued for breach of contract is indeed a legitimate consequence for a licensee who acts beyond their authorized power.