Which type of agency relationship does not require a formal contract?

In the context of agency relationships in real estate, an implied agency is one that arises from the actions and behaviors of the parties involved rather than from a formal, written agreement. This type of agency occurs when a relationship is established based on the conduct of the parties—suggesting that one party is acting on behalf of another without explicitly stating so in a contract.

Implied agency can occur in situations where the actions of the agent indicate to the principal that the agent is authorized to act on their behalf. For example, if a real estate agent engages in activities that clearly demonstrate their representation of a client, such as showing properties or negotiating on behalf of that client, an implied agency may exist even without a written contract.

In contrast, other types of agency relationships, such as express agency, require a formal agreement that clearly delineates the terms of the relationship. The agent-principal relationship typically also involves some level of contract, and designated agency is often a specific arrangement made by the brokerage regarding how agents represent clients within the same firm.

Understanding implied agency is essential as it illustrates how agency can be established through behavior and context, rather than solely relying on formal contracts. This is particularly relevant in real estate transactions where interactions between agents and clients can sometimes lead to