Which instance is an example of an agency relationship terminated by operation of law?

Which instance is an example of an agency relationship terminated by operation of law?

• A. The subject property burns down
• B. The broker moves to another state
• C. The agency term expires
• D. The parties mutually agree to terminate

Answer: (A)

The key idea here is that an agency can end automatically when the subject matter can no longer be acted upon. If the property burns down, there’s no real estate left to sell, so the agent can’t perform the duties of the agency. That termination happens by operation of law—the law recognizes that the agency has become impossible to carry out, so it ends without requiring agreement or action from either party. The other scenarios involve voluntary or contractual terminations. Moving the broker to another state doesn’t automatically terminate by law; the agency could still be active or require a formal termination. An agency term expiration ends the relationship by the contract’s terms rather than by law. A mutual termination is likewise a voluntary agreement, not an automatic legal termination.

The key idea here is that an agency can end automatically when the subject matter can no longer be acted upon. If the property burns down, there’s no real estate left to sell, so the agent can’t perform the duties of the agency. That termination happens by operation of law—the law recognizes that the agency has become impossible to carry out, so it ends without requiring agreement or action from either party.

The other scenarios involve voluntary or contractual terminations. Moving the broker to another state doesn’t automatically terminate by law; the agency could still be active or require a formal termination. An agency term expiration ends the relationship by the contract’s terms rather than by law. A mutual termination is likewise a voluntary agreement, not an automatic legal termination.