Which element is NOT required to establish an agency relationship according to the Johnson/Priceline rule?

Which element is NOT required to establish an agency relationship according to the Johnson/Priceline rule?

• A. Principal manifests assent
• B. Agent accepts
• C. Principal has the right to control the undertaking
• D. Agent must be paid a fee

Answer: (D)

Agency is formed when the principal manifests assent to appoint an agent to act on the principal’s behalf, the agent consents to act, and the principal has the right to control the undertaking. The requirement to compensate the agent does not enter into the formation of the relationship—an agent can be unpaid and still create an agency if the other elements are present. The paid-for element is not necessary for agency; even a gratuitous arrangement can be an agency as long as the principal has the right to control and the agent consents to act.

Agency is formed when the principal manifests assent to appoint an agent to act on the principal’s behalf, the agent consents to act, and the principal has the right to control the undertaking. The requirement to compensate the agent does not enter into the formation of the relationship—an agent can be unpaid and still create an agency if the other elements are present. The paid-for element is not necessary for agency; even a gratuitous arrangement can be an agency as long as the principal has the right to control and the agent consents to act.