California Real Estate Broker ExaminationAgencyEasy
A real estate agent is hired by a landlord to find a tenant for a commercial property. The agent successfully finds a tenant, negotiates the lease terms, and the lease is signed. The agent's authority to act on behalf of the landlord is then terminated. This is an example of which type of agency termination?
- ARevocation by the principal
- BCompletion of the agency purpose
- CExpiration of the agency term
- DMutual agreement
Show answer & explanationAnswer & explanation
Correct answer: B. Completion of the agency purpose
Agency relationships are terminated when the specific purpose for which they were created has been fulfilled. In this case, the agent's purpose was to find a tenant and negotiate a lease, which was successfully completed.
Why the other options are wrong
- A. Revocation by the principal would be the landlord unilaterally canceling the agreement before its purpose was fulfilled.
- C. Expiration of the agency term would mean the agency agreement had a specific end date that was reached, which is not stated as the reason here.
- D. Mutual agreement would involve both the landlord and agent agreeing to terminate the agency.
Termination of Agency by Completion
An agency relationship ends naturally when the specific task or objective for which the agent was hired has been fully accomplished.
- Also known as 'fulfillment of purpose'
- Automatic termination once goal achieved
- No further action required by either party
- Common in project-based agency agreements
Memory trick: Agency ends when purpose is done, or agreement is undone.