1. Termination by Mutual Agreement
Question 1:
An agency relationship can be terminated by mutual agreement between the principal and the agent. What does this entail?
A) Both parties must provide written notice to a third party
B) Both parties agree to end the agency relationship
C) One party must fulfill all contractual obligations before termination
D) The principal must compensate the agent for potential losses
Answer: B) Both parties agree to end the agency relationship
Question 2:
When an agency relationship is terminated by mutual agreement, which of the following is typically not required?
A) A written document outlining the termination
B) The payment of any outstanding commissions
C) Notification to any third parties affected by the termination
D) A formal court proceeding
Answer: D) A formal court proceeding
2. Termination by Revocation
Question 1:
The principal can terminate an agency relationship by revoking the agent’s authority. Which of the following is a key requirement for such termination to be effective?
A) The agent must agree to the revocation
B) The principal must notify the agent and any third parties involved
C) The principal must compensate the agent for any losses incurred
D) The principal must seek judicial approval
Answer: B) The principal must notify the agent and any third parties involved
Question 2:
Revocation of an agent’s authority is effective when:
A) The agent is notified verbally
B) The principal sends a written notice to the agent
C) The agent receives the notice from a third party
D) The agent reads about it in the newspaper
Answer: B) The principal sends a written notice to the agent
3. Termination by Operation of Law
Question 1:
Which of the following is an example of termination of an agency relationship by operation of law?
A) The principal’s business is sold
B) The agent resigns from their position
C) The agent is fired for poor performance
D) The principal and agent reach a mutual agreement to terminate
Answer: A) The principal’s business is sold
Question 2:
Agency relationships are typically terminated by operation of law under which of the following circumstances?
A) Bankruptcy of the principal
B) Disagreement between principal and agent over fees
C) The agent’s voluntary withdrawal
D) An agreement to extend the agency term
Answer: A) Bankruptcy of the principal
4. Termination by Fulfillment of Purpose
Question 1:
When an agency relationship is terminated because the purpose for which the agency was created has been fulfilled, this is referred to as:
A) Termination by mutual agreement
B) Termination by operation of law
C) Termination by expiration
D) Termination by revocation
Answer: C) Termination by expiration
Question 2:
Which of the following would likely lead to termination of an agency by fulfillment of purpose?
A) The agent completes the sale of a specific property
B) The principal decides to change the agent’s commission structure
C) The agent resigns from their position
D) The principal and agent have a disagreement
Answer: A) The agent completes the sale of a specific property
5. Termination by Death or Incapacity
Question 1:
In most cases, an agency relationship is terminated by the death or incapacity of:
A) The agent only
B) The principal only
C) Either the agent or the principal
D) A third party involved in the contract
Answer: C) Either the agent or the principal
Question 2:
Which of the following is true regarding termination of agency due to incapacity?
A) The agency relationship continues as long as the agent remains incapacitated
B) The incapacity must be permanent for termination to be valid
C) The principal’s incapacity terminates the agency relationship, while the agent’s incapacity does not
D) The agent’s incapacity terminates the agency relationship, while the principal’s incapacity does not
Answer: B) The incapacity must be permanent for termination to be valid