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Agency Relationship - Explained

Who is the Principal and Agent?

Written by Jason Gordon

Updated at April 5th, 2023

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What is an agency relationship?

An agency relationship is one in which a party acts on behalf of and with the authority of another party. The principal appoints or authorizes the agent to act on her behalf. 

Next Article: Scope of the Principal-Agent Relationship Back to: AGENCY LAW

Responsibility in the Principal for Agent Actions?

The agent will interact with third parties on behalf of the principal. A principal is responsible for the actions of the agent taken in furtherance of her duties or per the instructions of the principal. The agency relationship requires an understanding of the relationship between principal and agent, agent and third parties, and the principal and third parties roles, responsibilities, and rights.

Example: I hire Betty to negotiate a business deal on my behalf. I am the principal and Betty is my agent for this purpose. Betty will act as my representative in dealing with the third parties to this business deal.

Related Topics

  • Agency Law (Intro)
  • What is an Agency relationship?
  • What are the types of agents?
  • Employee vs. Independent Contractor
  • What are the types of principals?
  • What is required to form a principal-agent relationship?
  • What are the duties of a principal?
  • What are the duties of an agent?
  • What is the authority of an Agent to Bind Business in Contract?
  • When are Agents liable to principals and third parties?
  • What is Respondeat Superior?
  • What is a Frolic and Detour?
  • When does the Agency Relationship Terminate?
agency relationship explained

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