What can lead to legal liability for an agent?

The correct answer pertains to misrepresentation while representing a property, which can indeed result in legal liability for an agent. When an agent makes false statements or fails to disclose important information about a property, it can mislead potential buyers or other parties involved in a transaction. This miscommunication can have serious financial repercussions and may lead to lawsuits against the agent for damages incurred by the aggrieved party. Agents have a fiduciary duty to provide accurate and truthful information, and failing to uphold this duty can breach that legal obligation, resulting in liability.

In contrast, failing to follow the principal’s instructions could lead to liability, but it would depend on the nature of the instructions and whether they were reasonable actions aligned with the agent's role. Providing accurate and truthful information and maintaining good communication with the principal typically protect the agent from liability, reinforcing the agent's commitment to transparency and fidelity in their role. These actions are viewed positively in the context of agency law.