Termination by operation of law can occur in which scenario?

• A. Minor or fraud
• B. Property destroyed by fire
• C. Incompetence
• D. Bankruptcy

Answer: (A)

Terminations by operation of law happen automatically when a change in legal status makes it impossible or illegal to continue the agency, without any new agreement. If the principal is a minor, they lack the legal capacity to engage or maintain an agency in many contexts, so the authority ends by operation of law. Similarly, if fraud is involved, the arrangement rests on deceit, and the law terminates the relationship to prevent enforcement of a fraudulent act. While other events like destruction of the subject matter or bankruptcy can also end an agency, situations involving a minor or fraud clearly illustrate how the law can automatically dissolve the relationship without the parties’ mutual consent.