How is implied agency created?

• A. By written contract
• B. By verbal agreement
• C. By actions and customs
• D. By oral promise

Answer: (C)

Implied agency is established through the actions and customs of the parties involved rather than through explicit, written, or verbal agreements. It arises when one party behaves in a way that suggests they are acting on behalf of another party, and the other party accepts this behavior, thereby creating an agency relationship without a formal contract.

For example, if a real estate agent consistently represents a buyer in property negotiations, and the buyer acts as though the agent has authority to represent their interests—such as giving the agent access to make offers or conduct viewings—then an implied agency can be established. The relationship is reinforced by the customary practices and reasonable assumptions made by the involved parties.

This concept highlights how agency can be formed through practical relationships in the course of business, which is essential for real estate transactions where all parties need to be clear about their rights and representations.