The definition and elements of agency

Agency enables one person, the agent to represent the interests of another, the principal. The agent is authorised by the principal to create or affect legal relations between the principal and a third party. Common examples of an agency relationship are a company and its directors, brokers, partners in a firm and the solicitor/client relationship. The agency relationship is a fiduciary one. Agents have become a necessary part of commerce given the need for businesses to use other people to act on their behalf.

To create an agency relationship you need:

• • a principal and an agent;
• • consensus between the parties that the agent will act on behalf of the principal and be subject to the principal’s control; and
• • capacity of the parties to act.

See The definition and elements of agency.