Termination of the Agency Relationship

Question 1

Power of Termination

Answer 1

• Both the principal and agent have the power to terminate the agency relationship at any time.
• However, this does not mean they have the right to terminate (party can bring a breach of K action).

Question 2

Death or Incapacity

Answer 2

Of either the principal or agent will automatically terminate the agency.

Question 3

Notice of Termination (Principal)

Answer 3

For termination to be effective, principal must notify the agent of termination unless:

• the agency naturally expires upon completion of an action; or
• the agency is set to expire at a particular time
• notification need not be express

Question 4

Termination of Apparent Authority

Answer 4

Principal must notify all third parties with whom the agent has dealt who might expect the agent to still be acting for the principal.

Question 5

Exceptions to Power of Termination

Answer 5

An agency is not terminable at will if:

• the agency is coupled with an interest (agent has interest in SM of agency (e.g. insurance policy gives insurer the right to settle)); or
• the agent has a power given for security (agency was created for the purpose of payment of a debt owed by the principal (e.g. agreement giving mortgagee the power to collect and apply rents from mortgaged premises))