Real Estate License Agency Relationships 3

Question 1

A listing agency agreement most commonly terminates when:

Accepted Answer

The agreed listing period expires or the transaction closes

Answer

A listing agreement typically ends upon expiration of its agreed term, completion of the sale, mutual agreement to cancel, or termination by operation of law.

Question 2

In agency law, 'ratification' means:

Accepted Answer

A principal retroactively approves an unauthorized act performed by the agent

Answer

Ratification occurs when a principal accepts or approves an act that the agent performed without prior authorization, making that unauthorized act legally binding on the principal.

Question 3

When a real estate agent tells a prospective buyer, 'This is absolutely the best neighborhood in the entire city,' without factual support, the agent is engaging in:

Accepted Answer

Puffing

Answer

Puffing refers to exaggerated, subjective promotional statements that are not considered legally actionable because reasonable buyers understand them as opinions rather than fact.

Question 4

Vicarious liability holds a real estate broker legally responsible for:

Accepted Answer

Wrongful acts committed by the agents the broker supervises

Answer

Vicarious liability means a broker can be held legally responsible for their agents' misconduct even if the broker did not participate directly, because of the supervisory relationship.

Question 5

Agency terminates 'by operation of law' automatically upon:

Accepted Answer

The death, bankruptcy, or incapacity of either the principal or the agent

Answer

Certain events — death, bankruptcy, or mental incapacity of either party — automatically end the agency relationship by law without requiring formal notice or agreement.

Real Estate License Practice Test

Real Estate License Practice Test

Real Estate License Agency Relationships 3