BPA Business Law & Ethics Practice Test

In the context of agency relationships in business law, a dual agency occurs when an agent represents two different parties in the same transaction, creating a situation where the agent has a fiduciary duty to both parties. This relationship can lead to conflicts of interest, as the agent must navigate the competing interests and expectations of both clients.

In this case, the correct answer identifies that dual agency arises specifically when a principal acts for two or more different agents in the same transaction. This creates the potential for conflicts, as the agent's ability to advocate for the best interests of both principals may be compromised.

The other options do not accurately describe dual agency: they pertain to multiple representations that occur in different contexts or transactions, rather than within the same transaction. Understanding the implications of dual agency is essential, as it emphasizes the importance of transparency and disclosure in agency relationships to ensure that all parties involved are aware of the potential conflicts and can make informed decisions.

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