What is the default rule in agency law regarding the terms of agency relationships?

What is the default rule in agency law regarding the terms of agency relationships?

• A. It applies unless changed by agreement
• B. It cannot be changed by agreement
• C. It applies only with a formal contract
• D. It applies only to fiduciary duties

Answer: (A)

In agency law, the terms of the relationship come from a contract, but the law also provides default rules to fill in any gaps. Those defaults serve as a baseline, and the parties are free to tailor or override them by agreement. So the default rule is that the terms apply unless the principal and agent explicitly change them in a contract or agreement. This mirrors how agency is fundamentally a contractual relationship: you start with standard expectations about authority, duties, duration, and termination, and you can modify those through the contract if you and the other party want different terms. If a term isn’t specified, the default rules govern; if you want different terms, you simply agree to them. The other options miss this flexible, contract-driven structure and wrongly suggest the terms are immutable, require a formal contract, or only concern fiduciary duties.

In agency law, the terms of the relationship come from a contract, but the law also provides default rules to fill in any gaps. Those defaults serve as a baseline, and the parties are free to tailor or override them by agreement. So the default rule is that the terms apply unless the principal and agent explicitly change them in a contract or agreement. This mirrors how agency is fundamentally a contractual relationship: you start with standard expectations about authority, duties, duration, and termination, and you can modify those through the contract if you and the other party want different terms. If a term isn’t specified, the default rules govern; if you want different terms, you simply agree to them. The other options miss this flexible, contract-driven structure and wrongly suggest the terms are immutable, require a formal contract, or only concern fiduciary duties.