What is implied agency?

• A. Occurs when parties act as though there is an agency or when they have agreed to an agency by actions.
• B. Requires a written contract to create an agency.
• C. Does not apply if there is a broker involved.
• D. Is the same as a formal agency agreement.

Answer: (A)

Implied agency comes from how people act, not from a signed contract. When the parties behave as if there is an agency—sharing information, negotiating, or letting someone represent them in discussions—a relationship can be inferred. A reasonable third party observing those actions would believe that the agent has authority to act for the principal, even without a formal written agreement. This can happen with or without a broker involved.

So this best description captures the idea: agency exists because the parties act as though an agency exists or because they have effectively agreed to one through their actions. By contrast, a formal agency is tied to a written contract, which is not required for implied agency.