Ozgod is a principal and Flood is his agent. Ozgod is totally dissatisfied with the agency relationship and wishes to terminate it. In which of the following situations does Ozgod not have the power to terminate the relationship?
A. Ozgood and Flood have agreed that their agency is irrevocable.
B. Flood is an agent coupled with an interest.
C. Flood has been appointed as Ozgood’s agent pursuant to a power of attorney.
D. The agency agreement is in writing and provides for a specific duration which has not elapsed.
Answer:B
B is corrent because normally a principal has the power to terminate an agency relationship even though it would constitute a breach to do so. However, where the agency is an agency coupled with an interest (i.e., where the agent owns part of the subject matter, the principal does not have the power to terminate the relationship).
A is incorrect because a principal can elect to terminate the agency relationship and be liable for breach of contract even though he has agreed that the agency is irrevocable.
C is incorrect because an appointment of an agent pursuant to a power of attorney does not deprive the principal of the power to terminate the relationship.
D is incorrect because an agency agreement, even if it provides for a specific duration, can be terminated by the principal even if the termination is in violation of the agreement. However, this action does subject the principal to a suit for damages.
