National Real Estate Exam (PSI)General Principles of AgencyEasy
A seller and a listing broker both agree in writing to cancel their listing agreement before its expiration date, with no sale having occurred. What method of agency termination does this represent?
- ATermination by expiration
- BTermination by revocation
- CTermination by mutual agreement
- DTermination by operation of law
Show answer & explanationAnswer & explanation
Correct answer: C. Termination by mutual agreement
When both parties voluntarily agree to end the agency relationship before the contract term ends, this is termination by mutual agreement (mutual rescission).
Why the other options are wrong
- A. Expiration occurs automatically when the contract term runs out, not by early cancellation.
- B. Revocation is a unilateral act by the principal alone, not agreed to by both parties.
- D. Operation of law involves events like death or destruction of property, not a voluntary agreement.
Termination by Mutual Agreement
An agency relationship ends when both the principal and agent voluntarily agree, in writing, to cancel the agreement before its natural conclusion.
- Requires consent of both parties
- Also called mutual rescission
- Different from unilateral revocation or renunciation
Memory trick: Mutual = both sign to end it early