Definition
Agency is a legal relationship in which one person, called the agent, is authorized to act on behalf of another person, called the principal. The agent acts on behalf of the principal with the authority to create legal obligations between the principal and third parties.
Scope of Agency
- Authority: The principal grants authority to the agent to act on their behalf. This can be done explicitly or implicitly, and the scope of authority may be limited or broad, depending on the terms of the agency agreement.
- Duties and obligations: Both the principal and the agent have certain duties and obligations to each other. The agent is required to act in the best interests of the principal and to exercise reasonable care and skill in carrying out their duties. The principal is required to compensate the agent for their services and to indemnify them against any losses or liabilities incurred while acting on behalf of the principal.
- Termination: The agency relationship can be terminated by mutual agreement, by expiration of the agency agreement, or by revocation by the principal or renunciation by the agent. The termination of the agency relationship may have implications for any contracts or agreements entered into by the agent on behalf of the principal.
- Liability: The principal may be liable for the actions of the agent carried out within the scope of their authority, and the agent may be liable for any breaches of their duties or obligations to the principal.
