Agency Law
Agency law is a principle of the common law that speculates the bindings and relationship formed between a principal and an agent. Typically, an agency relationship arises when a principal authorizes an agent to act on their behalf in dealings with third parties. The roles of both principal and agent are determined by the specific language of the agreement between them. There are distinctions between a principal and agent that must be respected in an agency relationship, as they are responsible to each other in different ways. The principal must provide a level of trust to the agent in order to grant authority, while the agent must be a faithful representation of the principal’s best interests.
Generally, an agent is a person or entity that has been authorized by a principal to act on their behalf established under common law. The law recognizes the concept of agency when a relationship between two parties has been created. Commonly, this relationship will be evidenced through contract that is voluntarily agreed upon by the parties involved in the agency agreement. The language of the contract will determine the extent of authority given to the agent by the principal and their responsibilities to each other. There are a number of duties expected of the agent to the principal. These include loyalty, obedience, reasonable care, diligence and disclosure. In addition, the agent must also remain confidential about all of the principal’s information and interests.
The principal, or employer, is the individual or entity that authorizes another to act on their behalf. This authorization is generally created through the terms of an explicit or implied agency agreement. The principal usually has the right to control and direct the activities of the agent, how the agent made decisions, and which third parties the agent can and cannot interact with. A principal is essentially liable for any actions and behavior of the agent when acting on behalf of the principal.
There can be many benefits gained from having an agency relationship. For instance, when a principal entrusts the agent with a certain level of autonomy, it may allow a principal to establish more contacts with potential clients and to be more proactive in engaging new customers. It may also necessitate more efficiency through having an extra pair of eyes to double-check things or to get help with day-to-day business activities. Last, the principal is able to access resources and knowledge from the agent, leading to a better-positioned principal in the industry segment.
In summary, agency law is a principle of the common law governing the legal relationship between a principal and an agent. In short, it is the authorization to act on behalf of another in pursuing the principal’s best interests. The obligations of both parties must be carefully considered as any breach of the contract or duties can result in legal claims and ramifications. However, when a principal entrusts a capable agent, it can be mutually beneficial for both. It can extend the influence of the principal and alert them to more potential opportunities, while the agent may gain a level of respect and credibility.
