A buyer's agent is midway through negotiating a purchase contract for her buyer client when the buyer suffers a severe stroke. A probate court then enters an order finding the buyer legally incapacitated, and no power of attorney is in place. Which doctrine governs what happens to the agency?
Correct Answer
C) Termination by the principal's incapacity
An agency rests on the continuing consent of two parties who have legal capacity, so the death or legal incapacity of either one ends it automatically, with no notice required from anyone. A durable power of attorney can keep an attorney-in-fact's authority alive through the principal's incapacity, but no power of attorney exists here, so the agent's authority to bind the buyer stops with the court's finding. Further negotiation requires a fresh agreement with the court-appointed guardian.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The highest legal obligation of trust and confidence owed by an agent to their principal, requiring the agent to act solely in the principal's best interest.
An agency relationship where the agent agrees to act on behalf of the principal without receiving compensation.
An agency relationship created by the conduct or actions of the parties rather than by a written or oral agreement.
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Previous Question
Two months into a six-month exclusive right-to-sell listing, the listing agent decides to leave her brokerage and move out of state. She sends the homeowner written notice that she is ending the representation, effective immediately. The homeowner had not asked her to leave and did not agree to her departure. Which method ended the agency relationship?
Next Question
All of the following can terminate an agency relationship EXCEPT