Implied agency is typically created when?

• A. It occurs only with an explicit written contract
• B. It is created by statute
• C. It is created by the conduct of the parties
• D. It requires a court order

Answer: (D)

Implied agency comes from what the parties do and how they conduct themselves, not from a written agreement. When actions, conduct, and circumstances show that one party has authority to act on behalf of another, and a third party reasonably relies on that authority, an agency relationship is created by implication. This is why conduct and the appearance of authority are central: they signal to others that the agent has real power to negotiate, represent, or bind the principal, even without a signed contract.

Think of it as the difference between having a formal contract and having a relationship that has been demonstrated through behavior. If a principal lets an agent market a property, accept offers, and handle negotiations without objecting, that conduct can establish implied agency because the agent is acting with the principal’s apparent approval.

The other options involve forms of authority that come from explicit agreement or legal mandate: a written contract creates express authority, statutes authorize certain agency roles in specific contexts, and court orders are not the typical way implied agency is created (they may define or confirm authority in a dispute, but do not normally form it through conduct).