Agency Law

What Does Agency Law Mean?

Agency law is the body of law that regulates the relationship between a principal and an agent. The principal is the person who appoints the agent, and the agent is the person who carries out the work on behalf of the principal. The agency relationship is created when the principal appoints the agent to act on their behalf.

This can be done orally or in writing. The agent must have the authority to act on behalf of the principal. This authority can be expressed or implied.

Express authority is given when the principal specifically tells the agent that they can do certain acts on their behalf. Implied authority is where there is an understanding between the principal and agent that the agent has certain powers even though they have not been expressly granted by the principal.

For example, an estate agent impliedly has the authority to show properties to prospective buyers even though this may not have been expressly authorized by their client (the seller).

Agents owe duties to their principals, which include a duty of care, a duty of loyalty, and a duty of obedience. These duties are owed regardless of whether or not the agent is paid for their services. The duty of care requires agents to take reasonable care in carrying out their duties on behalf of their principals.

For example, if an estate agent agrees to find a buyer for a property, they must exercise reasonable skill and care in doing so. If they fail to do this and as a result, the property is sold at below market value, then they will have breached their duty of care and will be liable to pay damages to their client (the seller). The duty of loyalty requires agents to maintain loyalty to their principal and put their interests first – ahead of any other interests that they may have (including their own personal interests).

What are the Main Principles of Agency Law?

Agency law is a body of law that governs the legal relationship between two parties, known as the “principal” and the “agent.” This area of law is important for businesses because it establishes the rules by which an agent can legally bind a principal in contracts and other agreements. The main principles of agency law are:

  • The agent must have the authority to act on behalf of the principal. This authority can be expressed or implied. -The agent must act in good faith and in the best interests of the principal.
  • The agent must disclose any material information about the transaction to the principal. -The agent must obey all reasonable instructions from the principal.
  • The relationship between the principal and agent is fiduciary in nature, meaning that there is a duty of loyalty and trust between them.

What is Agency Law and Why is It Important?

Agency law is a legal area dealing with the relationships between agents and their principals. In business, an agent is usually someone who represents another person or organization in dealings with third parties. The agent may be authorized to perform certain tasks on behalf of the principal, such as negotiating contracts, buying or selling property, or providing advice. 

  • There are several reasons why agency law is important. Let’s see-
  • Agency law is important because it governs the rights and duties of the parties to an agency relationship.
  • When two people agree that one will act on behalf of the other in business dealings, they have formed an agency relationship.
  • The person who acts on behalf of another is called the “agent,” while the person being represented is known as the “principal.”
  • Agency relationships are created by agreement between the parties and can be either expresseded or implied.
  • The scope of an agent’s authority is determined by both contract law and agency law.
  • Contract law governs what an agent is allowed to do under a given contract; for example, a real estate agent working under a listing agreement with a homeowner has the authority to show prospective buyers around the house and answer their questions but does not have the authority to sell the house without further instruction from the homeowner.
  • Agency law goes beyond this to address situations where there may not be a written contract at all, or where there is ambiguity about what an agent is permitted to do.
  • For instance, if an employer tells an employee “find me a good candidate for this job opening” without giving any further guidance.
  • State laws governing employment agencies will likely determine whether or not the employee can lawfully solicit applications from friends and family members.

There are three types of agency relationships:

  1. General agency,
  2. Special agency, and
  3. Universal agency.

What are the 4 Types of Agency?

There are four types of agencies that are commonly used in business:

  • advertising,
  • public relations,
  • event planning and management, and
  • market research.

Each type of agency has its own unique set of skills and services that it offers to clients. Here is a brief overview of each type of agency:

Advertising Agencies:

Advertising agencies are responsible for creating and placing ads on behalf of their clients. They work with businesses to develop an advertising campaign that will reach the target audience and achieve the desired results. Advertising agencies often have creative teams who can develop eye-catching ad campaigns, as well as media buying teams who can place the ads in the most effective locations.

Public Relations Agencies:

Public relations (PR) agencies help businesses build and maintain a positive reputation with the public. PR agencies create press releases, plan media events, manage social media accounts, and carry out other activities to generate positive publicity for their clients. They also work with reporters to ensure that their client’s story is told accurately and positively in the news media.

Event Planning & Management Agencies:

Event planning & management (EPM) agencies handle all aspects of planning and executing special events such as conferences, product launches, conventions, galas, etc. EPM agencies work with clients to understand their objectives for hosting an event, then they develop a customized plan to make sure the event is successful. This includes tasks such as finding appropriate venues, negotiating contracts, coordinating logistics, handling on-site registration/check-in, and more.

After the event is over, EPM agencies also typically provide post-event analysis to help their clients assess whether or not the event achieved its goals.

 Market Research Agencies:

Market research (MR) agencies conduct surveys and focus groups to collect data about consumers’ needs/wants/behaviors related to specific products or services. This information is then analyzed by MR professionals who create reports detailing their findings which are used by businesses to make informed marketing decisions.

Agency Law Examples

Agency law is a legal doctrine that establishes the fiduciary relationship between a principal and an agent. The principal-agent relationship is created when one person (the “principal”) authorizes another person (the “agent”) to act on the principal’s behalf. The principal is typically bound by the acts of the agent, even if the agent acts without the principal’s knowledge or against the principal’s wishes.

There are many different types of agency relationships, but they all involve some form of delegation of authority from one party to another. Agency relationships can be found in both business and personal contexts. For example, a company may appoint an advertising agency to promote its products, or a homeowner may authorize a real estate agent to sell his or her house.

In each case, there is generally a written agreement between the parties that sets out their respective rights and obligations. The most common type of agency relationship is known as an express agency, which is created when the parties expressly agree (usually in writing) that an agency relationship exists between them. An express agency can also be created orally, but it is more difficult to prove its existence in court if there is no written contract.

An implied agency relationship arises when the conduct of the parties indicates that they believe an agency relationship exists, even though they have not expressly agreed to it. For example, if someone goes into a store and asks for help from a salesperson, an implied agency relationship has been created because the customer has relied on the salesperson’s expertise in choosing and purchasing products. Agency law governs all aspects of the Principal-Agent relationship, including the formation of contracts, powers, and duties of agents while acting on behalf of their principals including fiduciary duties owed by agents to their principals, compensation paid to agents, as well as termination procedures.


In agency law, an agent is a person who is authorized to act on behalf of another person or entity. The agent may be authorized to perform certain tasks, such as making decisions, signing contracts, or buying and selling property. The relationship between the agent and the person or entity they represent is called an agency relationship.

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