Agency — Definition & Exam Tips

agency

Agency is a legal relationship in which one person, the agent, is authorized to act on behalf of another, the principal, in dealings with third parties. In real estate, the broker is usually the agent and the seller or buyer is the principal, or client. The agent owes the principal fiduciary duties. Agency can be created by express agreement, by implication from conduct, or by ratification.

Exam tip: Be clear on roles: the client (principal) receives fiduciary duties, while a customer (third party) receives honesty and fair dealing but not advocacy.
Example: A homeowner signs a listing agreement with a brokerage. The brokerage becomes the seller's agent and must act in the seller's best interest.

1. An agency relationship can be terminated by all of the following EXCEPT:

Answer & explanation

Answer: A. Agency ends by performance, expiration, mutual agreement, operation of law, death or incapacity, or destruction of the property - not by the wish of an unrepresented customer.

Related terms & state variants

agent client customer fiduciary duties principal

Sources

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Last verified: 2026-10-23