Agency Explained

A legal relationship where one person (agent) acts on behalf of another (principal) to create legal obligations.

The person who authorizes the agent to act on their behalf.

The person authorized to act on behalf of the principal.

The agreement between the principal and the agent outlining the agent's authority.

The party with whom the agent interacts in a transaction on behalf of the principal.

The agent can be legally responsible if something goes wrong in the transaction, despite not being a direct party.

The scope of the agent's power to act on behalf of the principal.

The actions and transactions of an agent are legally considered the same as if the principal took those actions.

A person authorized to act on behalf of another (the principal) in business dealings with a third party.

The person who appoints an agent to act on their behalf.

The legal ability to enter into a contract or carry out a particular action.

A self-employed agent with ongoing authority to negotiate and conclude contracts for the sale or purchase of goods on behalf of a principal.

Agent's authority to act on behalf of the principal repeatedly over a long period, not just for a one-time transaction.

To discuss and come to an agreement on the terms of a contract or deal.

The principal whose identity is revealed to the third party during the dealings with the agent.

The principal whose identity is not disclosed to the third party.

An agent with unlimited authority to conduct all types of transactions for a principal.

An agent with broad authority to act on behalf of the principal in various business activities.

An agent with authority limited to a specific task or transaction.

An agent who acts as a guarantor for the solvency of the third party in a transaction.

Agent's actions that are central to the agency agreement, usually involve significant negotiation and decision-making.

Agent's actions that are not the central focus of the agency. Less central to the agreement.

English law assesses agency based on the scope of activities (commercial or not), while Scots law prioritizes the parties' intentions at the time of hiring the agent.

Regulations outlining factors to determine if an agent's activity is primary (e.g., negotiating terms) or secondary (e.g., principal handling direct customer interaction).

A legal doctrine allowing someone to act on another's behalf when urgent circumstances demand it to protect the principal's interest.

A Scottish legal principle: benevolent administration of another person’s affairs without prior authorization when immediate action is needed to protect their interests.

An agency relationship explicitly created through a formal agreement.

An agency created by the actions and conduct of the parties; no explicit deal.

Principal leads a third party to believe that an individual is their agent, giving the apparent authority to act on their behalf.

Retrospective approval of an agent's actions by the principal, making the actions valid.

Agency created by legal rules; partner are agents to each other, or directors are an agent for a company.

A person who acts on behalf of another (principal) to protect their property or interest when the principal is unable to act, and communication is impossible.

Agent's actions must be objectively necessary for principal's benefit, agent can't communicate with principal, and acts reasonably/prudently.

Benevolent management of another's affairs when they're absent or incapacitated, with the intention to benefit them.

Retrospective approval by a principal of an unauthorized act by an agent.

A principal cannot ratify an unauthorized act if it harms the rights of a third party who relied on the original agreement.

The agent's legal permission, expressly or impliedly granted by the principal, to act on their behalf.

Explicitly stated permission given by the principal to the agent.

Authority that is not explicitly stated but is understood from the circumstances or the nature of the agency relationship.

An agent who acts on the principal's behalf when there's an emergency and the principal is unable to act.

An agent's authority that a third party reasonably believes the agent possesses, even if that authority is not truly granted by the principal.

Retrospective approval of an unauthorized act by the principal.

Limits what actions an agent can take on the principal's behalf

If the agent acts within their authority, the principal is bound; outside authority, the principal is not, unless via ratification or apparent authority.

Agent is personally liable if they act without authority, unless the principal ratifies, or is subject to 'holding out' or agent of necessity.