Which term describes a relationship created by the parties' conduct rather than a formal written contract?

• A. Express agency
• B. Ostensible agency
• C. Implied agency
• D. Agency by necessity

Answer: (C)

Implied agency is created by the parties’ conduct rather than a formal written contract. When the way the principal and the agent act makes it clear to others that the agent has authority to act on the principal’s behalf, the law treats that relationship as an agency even without a written agreement. For example, if a property owner consistently lets someone handle negotiations and those actions lead others to believe the person can bind the owner, an implied agency exists. This differs from express agency, which comes from an explicit written or stated agreement; from ostensible (apparent) agency, which arises when a third party is led to believe there is authority based on the principal’s representations; and from agency by necessity, which kicks in in emergencies when action is required without prior authorization. So the relationship formed by conduct rather than a contract is implied agency.