Question 53

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

Mutual agreement in writing between the principal and the broker is a valid reason for terminating an agency agreement. This condition allows both parties to come to a consensus, thus ensuring clarity and legal compliance in the termination process.

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

This option is incorrect because simply receiving a low offer does not provide a valid reason for termination of the agency agreement. The principal can choose to reject the offer but does not have the unilateral right to terminate the agreement based on the offer's value alone.

B) parties mutually agree in writing

This option is correct as mutual agreement in writing is a legitimate and formal method for terminating an agency agreement. It ensures that both parties consent to the termination, thereby protecting their respective rights and obligations.

C) principal dislikes one of the broker's salespersons

Disliking a salesperson does not constitute a valid reason for termination. Agency agreements are typically based on the relationship between the principal and the broker, and personal feelings towards individual salespersons do not allow for unilateral termination.

D) agency is coupled with an interest in the property

This option is incorrect because an agency coupled with an interest usually creates a binding relationship that cannot be terminated unilaterally. The principal's interest in the property must be considered, which may complicate the termination process.

Conclusion

Mutual agreement in writing is the only option that provides a clear, legitimate pathway for terminating an agency agreement, ensuring both parties are in accord. The other options either misinterpret the conditions of termination or do not provide sufficient grounds for ending the agreement. Thus, option B is definitively the correct answer.