Difficulty: Medium

Average Score: 64%

Agency may be terminated by which of the following?

Rationale

Disclosure of a conflict of interest by the agent.

When an agent discloses a conflict of interest, it may lead to the termination of the agency relationship, as this can undermine the trust and obligations essential for effective representation. The agent's duty to act in the best interest of the client is compromised when conflicts arise, providing grounds for termination.

A (Discovery of a major defect in the property.) YOUR ANSWER

The discovery of a major defect in the property does not directly terminate the agency relationship. While it may affect the agent's ability to perform their duties or the client's decision to proceed with a transaction, it does not inherently dissolve the agency agreement between the agent and the client.

B (Payment of a cancellation fee to the agent.) YOUR ANSWER

Payment of a cancellation fee to the agent may facilitate the termination of the agency agreement, but it is not a required condition for termination. The payment of fees is typically a contractual matter and does not address the fundamental reasons for ending the agency relationship, which are usually related to performance or ethical considerations.

D (Lack of agreement by all parties to the contracts.) YOUR ANSWER

A lack of agreement by all parties involved in the contract can create issues, but it does not automatically terminate the agency. The agency may still exist until formally dissolved by mutual consent or through other legal means. The existence of a contract itself does not depend solely on unanimous agreement; it can still be upheld despite disagreements.

Conclusion

The termination of an agency relationship is most appropriately prompted by the disclosure of a conflict of interest by the agent, as this directly impacts the agent's ability to act in the client's best interests. Other options listed—such as property defects, cancellation fees, and lack of agreement—may influence the relationship but do not serve as definitive grounds for termination. Understanding these distinctions is crucial in real estate and legal contexts, where agency relationships are foundational to trust and representation.

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