PSI Virginia Real Estate Practice Exam

In what case can the termination of agency happen without explicit action from either party?

1. If the agent retires during the contract period

2. If the contract has an expiration date

3. Through mutual agreement to dissolve the contract

4. If one party changes their mind about the property

The correct answer is: If the contract has an expiration date

The termination of agency can occur without explicit action from either party when the contract has an expiration date. This situation is a natural conclusion to the agency relationship; once the designated time period specified in the contract has lapsed, the agency automatically terminates. This contractual expiration does not require any further action from either the agent or the principal, as the terms set in the agreement govern the continuation or cessation of the agency. In contrast, other scenarios, such as an agent retiring during the contract period, typically require some action or notification. The dissolution of the contract by mutual agreement also necessitates a deliberate decision and confirmation from both parties. Lastly, if one party simply changes their mind about the property, this would not automatically terminate the agency; a formal action or communication would generally be needed to sever the relationship. Hence, the expiration date provides an unequivocal and automatic resolution to the agency relationship.