Question 10

A principal may terminate an agency agreement when the parties mutually agree in writing.

A principal has the ability to terminate an agency agreement if both parties come to a mutual agreement in writing. This ensures that both the principal and the agent acknowledge and consent to the termination of the agreement.

A) broker presents an offer that the principal considers too low

This option is incorrect because a principal's dissatisfaction with a low offer does not automatically grant them the right to terminate the agency agreement. The agreement remains in effect until a valid reason or mutual consent is established.

B) parties mutually agree in writing

This option is correct as it highlights the legal requirement for both parties to consent to the termination of the agency agreement. A mutual written agreement solidifies the decision and ensures clarity and compliance with legal standards.

C) principal dislikes one of the broker's salespersons

Disliking a salesperson does not provide sufficient grounds for a principal to terminate an agency agreement. The relationship with the agent, including their staff, does not inherently affect the validity of the agreement unless specific terms allow for such termination.

D) agency is coupled with an interest in the property

This option is incorrect as an agency coupled with an interest generally indicates a binding agreement that cannot be terminated at will. Such arrangements are designed to protect the interests of the agent and do not allow for unilateral termination by the principal.

Conclusion

The correct answer is option B, as mutual written agreement is a fundamental principle in contract law that allows both parties to formally end their obligations. The other options fail to recognize the necessary legal conditions required for termination, thus reinforcing the importance of mutual consent in agency agreements.