Question 91

Agency may be terminated at any time by mutual agreement by all parties to the contract.

Mutual agreement by all parties allows for the termination of an agency relationship, as it is a consensual process that respects the wishes of both the principal and the agent.

A) discovery of a major defect in the property

While discovering a major defect in the property may impact the contract or the agent's duties, it does not automatically terminate the agency relationship unless explicitly stated in the agreement. Termination typically requires a mutual decision rather than a unilateral discovery.

B) payment of a cancellation fee by the agent

The payment of a cancellation fee by the agent may be a stipulation in some contracts, but it does not universally apply to all agency relationships. Termination is more effectively achieved through mutual agreement rather than solely relying on financial compensation.

C) disclosure of a conflict of interest by the agent

Disclosure of a conflict of interest may necessitate a reevaluation of the agency relationship, but it does not inherently terminate the agency. Again, mutual agreement is the primary means of ending the relationship when both parties are involved.

D) mutual agreement by all parties to the contract

This option accurately reflects the principle that an agency can be terminated at any time through the consensus of both the principal and the agent, ensuring that both parties agree to the termination of their contractual relationship.

Conclusion

The correct answer, mutual agreement by all parties to the contract, is definitive because it encompasses the need for both the principal and the agent to come to a consensus, which is essential for the termination of an agency relationship. All other options fail to provide the necessary collaborative element required for termination, as they either hinge on conditions or actions that may not involve both parties' agreement.