In which situation would an agent's authority be terminated by operation of law?

An agent's authority can be terminated by operation of law in situations that fundamentally alter the nature of the agency relationship. The death or mental incapacity of the principal is a significant event that legally dissolves the agency relationship, as the agent can no longer carry out the principal's wishes or act on their behalf. This termination occurs automatically because the agent can only act in accordance with the instructions and authority from a competent principal. Once the principal is deceased or becomes mentally incapacitated, they are no longer able to give consent or direction, and therefore, any authority granted to the agent ceases to exist.

In contrast, changes in an agent's personal preferences, changes to the principal's address, or a refusal by the agent to perform their duties do not automatically terminate the agency relationship. These situations may lead to a reassessment of the relationship or could result in the agent voluntarily terminating their role, but they do not invoke a legal termination of the agent's authority by operation of law. Hence, the condition related to the principal's death or mental incapacity is the only situation that provides clear, legal grounds for terminating an agent's authority automatically.