How does Maryland law characterize termination of agency by operation of law?

Maryland law characterizes the termination of agency by operation of law as occurring due to specific events like bankruptcy or death. This concept is rooted in the idea that certain circumstances fundamentally affect the relationship between the principal and the agent, rendering the agency relationship no longer viable.

When an agent or principal passes away, the agency terminates because the authority granted to the agent ceases to exist; similarly, if a principal declares bankruptcy, the capacity to engage in contracts is limited, which ends the agency's effectiveness. These events happen automatically by virtue of law, without the need for any action or agreement between the involved parties, highlighting the specific and significant nature of such occurrences in agency law.

This understanding is essential as it reflects a broader principle in agency law that some factors jeopardize the agency's foundation and necessitate an end to the agency relationship regardless of desires or agreements between the parties involved. The other options, while they represent valid concepts regarding agency termination in different contexts, do not accurately describe the scenario defined by operation of law.