What type of agency occurs when an agent acts for two or more different principals in the same transaction?

The correct answer is dual agency. In a dual agency situation, an agent represents two different principals in the same transaction, which can occur in various contexts, such as real estate where an agent may represent both the buyer and seller of a property. This type of agency can lead to inherent conflicts of interest, as the agent must balance the obligations and interests of both clients. In practice, dual agency requires full disclosure to all parties involved, and in many jurisdictions, it is necessary for both principals to consent to this arrangement for it to be valid.

Other types of agency, like exclusive agency, refer to arrangements where a principal grants one agent the sole right to act on their behalf, but not for multiple principals simultaneously. Universal agency involves one agent having the authority to act on behalf of a principal in almost all matters, which does not apply to representing multiple clients in a single transaction. Designated agency occurs when a real estate broker designates individual agents to represent the buyer and seller within the same firm, but again this does not embody the dual agency concept of representing multiple principals in the same transaction.