Which of the following can lead to the termination of an agency agreement?

The termination of an agency agreement can occur under several circumstances, among which is the death or dissolution of the business. When a principal who is a natural person passes away, the agency relationship ceases because the principal can no longer fulfill obligations associated with the agreement. Similarly, if a business entity, such as a corporation or a partnership, is dissolved, the agency agreement is typically terminated because the entity is no longer recognized under the law.

The rationale behind this principle is that agency relationships are fundamentally based on the trust and authority granted by the principal to the agent. If the principal (whether an individual or a business) is no longer in existence, there is no authority for the agent to act on behalf of the principal.

While a principal's change of mind and acts such as fraud may also lead to termination, they are not as absolute as the death or dissolution scenario, which brings about a definitive end to the agency relationship. Likewise, the agent's financial troubles might impact their performance but do not automatically terminate the agency agreement unless stipulated in the agreement itself or unless they lead to an inability to serve in the agency role.