Question 85

The agency automatically terminates.

When the seller dies, the exclusive agency agreement is automatically terminated due to the legal principle that contracts involving personal services do not survive the death of one of the parties.

A) automatically terminates.

This option is correct because an exclusive agency agreement is a personal contract that cannot be enforced after the seller's death. The death of the principal (the seller) results in the termination of the agency relationship as the agent can no longer act on behalf of the deceased.

B) continues with the seller's heirs.

This option is incorrect because the agency relationship does not automatically transfer to the seller's heirs. The heirs may need to establish a new agency agreement to sell the property, but the original agreement ceases to exist with the seller's death.

C) continues until the property is sold.

This option is also incorrect. The agency relationship is tied to the seller, and it does not continue after the seller's death. Thus, there is no provision for the agency to persist until the property is sold.

D) continues until the estate is settled.

This option is incorrect as well. The death of the seller terminates the agency agreement regardless of the status of the estate. The agent cannot represent the interests of a deceased seller or their estate without a new agreement in place.

Conclusion

The correct answer is that the agency automatically terminates upon the seller's death, as personal service contracts like an exclusive agency agreement do not survive death. All other options fail because they imply a continuation of the agency relationship, which is legally impossible once the principal is deceased. This reinforces the understanding that agency agreements are inherently personal and terminate with the death of the principal.