National Real Estate Exam (PSI)General Principles of AgencyMedium
A buyer works closely with a salesperson for several weeks, touring properties, receiving pricing advice, and discussing offer strategy, but never signs a buyer representation agreement. Based on this ongoing conduct, what type of agency may exist?
- ANo agency exists without a signed written contract
- BUniversal agency
- CImplied agency
- DExpress agency
Show answer & explanationAnswer & explanation
Correct answer: C. Implied agency
Implied agency arises from the parties' actions and conduct, even without a formal written agreement, when the behavior of the salesperson reasonably suggests representation. Courts and agencies look at conduct such as ongoing advice and assistance to determine if an implied agency exists.
Why the other options are wrong
- A. Agency can be created without a written contract; oral or implied agreements can also be valid depending on jurisdiction.
- B. Universal agency refers to broad scope of authority, not how the relationship was formed.
- D. Express agency requires a clear, stated agreement (oral or written), which did not occur here.
Implied Agency
An agency relationship created through the actions and conduct of the parties, rather than through an explicit oral or written agreement.
- Based on reasonable interpretation of conduct
- Can create fiduciary duties even without signed paperwork
- Distinct from express agency (clearly stated) and agency by estoppel (third-party reliance)
Memory trick: Actions speak louder than contracts