Which of the following is NOT a method to create an agency agreement?

The correct answer highlights that a mutual misunderstanding does not constitute a legitimate method to create an agency agreement. An agency agreement is typically established through clear communication between parties, either verbally or in writing, which outlines the responsibilities and relationship between the agent and the principal.

A verbal or written agreement involves explicit terms and conditions that are agreed upon by the parties involved, ensuring that both sides understand their roles. Estoppel refers to a legal principle that prevents someone from arguing something contrary to a claim they have previously accepted as fact due to their own actions or words, which can imply a form of agency without formal agreement. Similarly, agency by operation of law occurs in situations where the law recognizes the agency relationship automatically, often in specific contexts like parent-child relationships or other statutory provisions.

In contrast, mutual misunderstanding indicates a lack of clear communication or agreement, meaning one party may not genuinely understand the terms or existence of an agency relationship. Since an agency agreement requires clarity and consent, misunderstanding cannot validly establish such an agreement. This highlights the importance of proper communication in forming agency relationships.