All of the following terminate an agency relationship, except:
Question & Answer
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Destruction of the subject property.
correct answer. Destruction of the subject property terminates the agency relationship because the purpose of the agency becomes impossible to fulfill, making the contract frustrated and void.
Death or incapacity of the agent or principal.
correct answer. Death or incapacity of either the agent or principal automatically terminates the agency relationship because it destroys the personal trust and authority essential to the agency.
Refusal to perform by the agent or principal.
Completion of the purpose of the employment.
correct answer. Completion of the purpose of employment is one of the most common ways agency relationships terminate, as the reason for creating the relationship no longer exists.
Why is this correct?
Refusal to perform by either party doesn't terminate the agency relationship but may constitute a breach of contract. The agency continues until formally terminated through proper legal channels, unlike destruction of property, death, or completion of purpose which automatically terminate the relationship.
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