A listing agreement is an example of an agency relationship created by which of the following?

• A. Estoppel
• B. Express contract
• C. Ratification
• D. Implied contract

Answer: (B)

Verified step by step guidance

1. Understand the concept of an agency relationship: In financial accounting and business law, an agency relationship is formed when one party (the agent) is authorized to act on behalf of another party (the principal). This relationship can be created through various methods, including express contracts, implied contracts, estoppel, and ratification.
2. Define an express contract: An express contract is a legally binding agreement where the terms are explicitly stated, either orally or in writing. This is a direct and clear way to establish an agency relationship.
3. Relate the express contract to a listing agreement: A listing agreement is a formal, written contract between a property owner (the principal) and a real estate agent (the agent). The agreement explicitly outlines the agent's authority to act on behalf of the principal in selling or leasing the property.
4. Compare other options: Estoppel refers to preventing a party from denying an agency relationship due to their previous actions or statements. Ratification occurs when a principal accepts and confirms an agent's actions after they have been performed. An implied contract is formed through actions or circumstances rather than explicit terms. None of these methods directly apply to a listing agreement, which is explicitly created through an express contract.
5. Conclude that the correct answer is 'Express contract': Since a listing agreement is a formal, written document with explicitly stated terms, it is an example of an agency relationship created by an express contract.