Maryland Home Improvement PSI Practice Exam

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What type of agency is established when a principal authorizes an agent for a specific act?

Universal agency.
Special agency.
General agency.
Common agency.

The correct answer is: Special agency.

The correct answer is special agency. This type of agency is formed when a principal appoints an agent to perform a specific act or task on their behalf. The authority granted to the agent is limited to that particular act, meaning the agent does not have broader powers to make decisions or engage in transactions beyond this specified task. For instance, if a homeowner hires a contractor to remodel a bathroom, the contractor acts as a special agent for that specific project. In contrast, universal agency would allow the agent to act on behalf of the principal in all matters, which is not the case here. General agency encompasses a broader range of authority, typically allowing the agent to handle various tasks across a spectrum of activities for the principal. Common agency is not a standard term in agency theory, which makes it an inappropriate choice for this scenario. Thus, the designation of special agency correctly reflects the limited and specific nature of the agent's authority as defined in this context.