All of the following actions create an agency relationship, except:
Audio Lesson
Duration: 3:01
Question & Answer
Review the question and all answer choices
Subornation.
CORRECT_ANSWER: Subornation can create an agency relationship. When someone (subornator) induces or causes another to breach their duty to a principal, they may be held liable as if they were the agent, effectively creating an agency relationship by estoppel.
Implication.
CORRECT_ANSWER: Implication can create an agency relationship through conduct and circumstances. When parties' actions reasonably indicate an intention to create an agency relationship, law may recognize it even without explicit agreement.
Ratification.
CORRECT_ANSWER: Ratification can create an agency relationship. When a principal accepts benefits from an unauthorized act and fails to repudiate it, they retroactively approve the agency relationship from the time of the original act.
A verbal agreement.
Why is this correct?
A verbal agreement alone does not create an agency relationship in California. Agency requires a written agreement signed by the principal when dealing with real property interests. This statutory requirement (California Civil Code § 1624) protects consumers by ensuring clear documentation of agency relationships.
Deep Analysis
AI-powered in-depth explanation of this concept
Agency relationships are fundamental to real estate transactions, governing the legal connections between buyers, sellers, and their representatives. This question tests understanding of how agency relationships are created under California law, which is crucial for avoiding unintended legal obligations and liabilities. The core concept distinguishes between unilateral actions that cannot create agency and methods that can establish this relationship. To solve this question, we must recognize that agency requires mutual consent or specific legal doctrines, not just any action. The challenge lies in understanding nuanced legal terms like subornation, implication, and ratification, which are less common in everyday practice. This question connects to broader real estate knowledge about fiduciary duties, disclosure requirements, and potential liability scenarios when relationships are improperly established or misunderstood.
Knowledge Background
Essential context and foundational knowledge
In California, agency relationships are governed by common law principles and specific statutory requirements. The California Civil Code outlines how agency can be created through express agreement, ratification, or by estoppel. Importantly, California's statute of frauds requires any agency agreement for real property to be in writing and signed by the party to be charged (Civil Code § 1624). This requirement exists to prevent misunderstandings and provide clear evidence of the agency relationship's terms, protecting both principals and agents in high-value real estate transactions.
WRIR: Written, Ratification, Implication, and Estoppel are the four ways agency relationships can be created.
Remember 'WRIR' to quickly recall the valid methods of creating agency relationships. Since 'W' stands for written agreement, you'll remember that verbal agreements (option D) don't qualify for real estate transactions.
For agency creation questions, remember California's real estate statute of frauds requiring written agreements. If an option mentions verbal agreement for real property, it's likely incorrect for agency creation.
Real World Application
How this concept applies in actual real estate practice
A homeowner verbally tells a neighbor they want to sell their house for $500,000 and asks the neighbor to find a buyer. The neighbor finds a buyer who offers $480,000, and the homeowner accepts. In California, this verbal agreement would not create a valid agency relationship because it wasn't in writing. If the homeowner later refuses to pay the neighbor a commission, the neighbor would likely lose because California's statute of frauds requires written agreements for real estate agency relationships. This scenario highlights why written agreements are essential in real estate transactions.
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