California Real Estate Practice Exam

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What is the term used to describe the authority specified in an agency agreement?

Actual authority
Implied authority
Apparent authority
Derived authority

The correct answer is: Actual authority

An agency agreement is a contract that specifies the relationship between two parties, where one party (the agent) acts on behalf of the other party (the principal). In this context, the term "authority" refers to the power or permission granted to the agent by the principal. The term "actual authority" is used to describe this type of authority as it is explicitly stated in the agency agreement. The other options, implied authority, apparent authority, and derived authority, are not the correct terms because they either refer to situations where the agent's authority is not explicitly stated in the agreement or are not recognized as valid forms of authority in an agency relationship. Therefore, the correct term to describe the authority specified in an agency agreement is actual authority.