LAW OF AGENCY-FINAL PRACTICE EXAMINATION 2026
QUESTIONS WITH ANSWERS GRADED A+
● Law of Agency. Answer: Body of law governing relationships between principals and
agents
● Principal-Agent Relationship. Answer: Legal relationship creating authority and duty
● Third Party. Answer: Person outside the agency relationship who deals with the agent
● Contractual Capacity. Answer: Legal ability to enter into binding agreements
● Statute of Frauds. Answer: Law requiring certain contracts to be in writing
● Agency Agreement. Answer: Contract establishing terms of the agency relationship
● Compensation Agreement. Answer: Contract specifying how agent will be paid
● Performance Standard. Answer: Level of skill and care required of agent
● Conflict of Interest. Answer: Situation where agent's personal interest conflicts with
principal's
● Self-Dealing. Answer: Agent transacting for personal benefit at principal's expense
● Secret Profit. Answer: Undisclosed gain made by agent at principal's expense
● Kickback. Answer: Undisclosed payment to agent from a third party
● Commingling. Answer: Improper mixing of client funds with agent's own funds
● Conversion. Answer: Unauthorized use of client's funds by agent
● Trust Account. Answer: Separate account required for holding client funds
● Escrow Account. Answer: Account holding funds pending completion of a transaction
● Earnest Money Handling. Answer: Proper procedures for receiving and holding buyer
deposits
● Record Keeping. Answer: Required documentation of all transactions and funds
QUESTIONS WITH ANSWERS GRADED A+
● Law of Agency. Answer: Body of law governing relationships between principals and
agents
● Principal-Agent Relationship. Answer: Legal relationship creating authority and duty
● Third Party. Answer: Person outside the agency relationship who deals with the agent
● Contractual Capacity. Answer: Legal ability to enter into binding agreements
● Statute of Frauds. Answer: Law requiring certain contracts to be in writing
● Agency Agreement. Answer: Contract establishing terms of the agency relationship
● Compensation Agreement. Answer: Contract specifying how agent will be paid
● Performance Standard. Answer: Level of skill and care required of agent
● Conflict of Interest. Answer: Situation where agent's personal interest conflicts with
principal's
● Self-Dealing. Answer: Agent transacting for personal benefit at principal's expense
● Secret Profit. Answer: Undisclosed gain made by agent at principal's expense
● Kickback. Answer: Undisclosed payment to agent from a third party
● Commingling. Answer: Improper mixing of client funds with agent's own funds
● Conversion. Answer: Unauthorized use of client's funds by agent
● Trust Account. Answer: Separate account required for holding client funds
● Escrow Account. Answer: Account holding funds pending completion of a transaction
● Earnest Money Handling. Answer: Proper procedures for receiving and holding buyer
deposits
● Record Keeping. Answer: Required documentation of all transactions and funds
