Leasing License Practice Exam

What defines express agency?

1. An informal agreement without documentation

2. An agency created by mutual consent without communication

3. A written or oral agreement between a principal and an agent

4. An agency based solely on implied actions

The correct answer is: A written or oral agreement between a principal and an agent

Express agency is defined by a clear agreement between the principal and the agent, which can be communicated either in writing or orally. This distinct relationship establishes the agent's authority to act on behalf of the principal in specified matters. The clarity of this arrangement is essential for both parties, as it sets forth the obligations, rights, and limitations of the agent's authority. The other options do not accurately capture the nature of express agency. An informal agreement without documentation lacks the necessary clarity and may lead to misunderstandings about roles and responsibilities. Similarly, an agency created by mutual consent without communication fails to outline the authority and expectations that define an express agency. Lastly, an agency based solely on implied actions relies on behavior rather than explicit consent, which is characteristic of implied agency rather than express agency. Therefore, the correct choice reflects the significance of having a mutual understanding that is well communicated between the principal and agent.