Termination of an agency contract includes which of the following?

• A. Death of one party
• B. Frustration
• C. Letter of termination by the principal
• D. Insanity of the agent or the principal

Answer: (B)

Frustration means the contract ends when an event occurs after it’s formed that makes the agency’s duties impossible to perform or defeats the contract’s purpose, through no fault of either party. In real estate practice, this covers situations where an unforeseen event renders the listing or sale impossible or illegal, so the agency relationship is discharged even if neither party wants to terminate. This is a distinct way to end the contract beyond voluntary termination by the principal or personal incapacity, and it doesn’t rely on a notice or personal ability to perform. That’s why termination by frustration is the best fit here.