Agency
A principal may terminate an agency relationship at any time. However, doing so before the agency term expires may result in:
ACriminal prosecution of the principal
BLicense revocation of the broker
CThe principal being liable for damages to the agent✓ Correct
DAutomatic renewal of the listing agreement
Explanation
While a principal can terminate an agency relationship at will, terminating before the contractual term expires may constitute a breach of the listing agreement, making the principal liable for the broker's damages (such as marketing expenses incurred).
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Key Terms to Know
Agency
A legal relationship in which a licensee (agent) acts on behalf of a principal (buyer or seller) in a real estate transaction.
Listing AgreementA contract between a property owner and a real estate broker that authorizes the broker to market and sell the property.
Dual AgencyA situation where a single real estate agent or brokerage represents both the buyer and the seller in the same transaction.
Fiduciary DutyThe highest legal duty an agent owes to a principal — requiring the agent to act in the principal's best interest above all others.
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