What Is an Agency in Law

As these questions suggest, agency law often involves three parties – the principal, the agent and a third party. It therefore deals with three different relationships: between the client and the agent, between the client and the third party, and between the authorised representative and the third party. These relationships can be summarized in a simple diagram (see Figure 11.1 „Agency Relationships“). According to the agency`s law, if a person is injured in a traffic accident with a pickup truck, the truck driver`s employer can be held liable to the injured person, even if the employer was not directly responsible for the accident. This is because the employer and the driver are in a relationship called the principal agent, where the driver as an agent is authorized to act on behalf of the employer who is the principal. An agent whose repayment depends on continuing to have the authority to act as an agent would have associated an agency with an interest if he or she has an interest in the ownership of the business. A literary or author agent, for example, usually agrees to sell a literary work to a publisher in exchange for a percentage of all the funds the author earns by selling the work. The documentation agent also acts as a collection agent to ensure that his commission is paid. By agreeing with the client that the agency is associated with an interest, the representative may prevent the termination of his own rights in a particular literary work to his detriment. Most oral agency contracts are legally binding; The law does not require that they be reduced to writing. In practice, many agency contracts are drafted to avoid evidentiary problems.

And there are situations where an agency contract must be written: (1) if the agency`s agreed purpose cannot be fulfilled within one year or if the agency relationship is to last more than a year; (2) in many states, an agreement to pay a commission to a real estate agent; (3) in many states, the power granted to a broker to sell real estate; and (4) in several states, contracts between companies and commercial agents. A consensual relationship established by contract or by law in which one party, the principal, another party, the agent, grants the power to act on behalf of and under the control of the principal to deal with a third party. An agency relationship is fiduciary in nature, and the actions and words of an agent exchanged with a third party are binding on the client. Agency law is an area of commercial law that deals with a number of contractual, quasi-contractual and non-contractual fiduciary relationships involving one person, the so-called agent, who is authorized to act on behalf of another (called the client) in order to establish legal relationships with a third party. [1] In short, it can be described as the equal relationship between a contractor and an agent in which the principal expressly or implicitly authorizes the agent to work under their control and on their behalf. The entrepreneur is therefore obliged to negotiate on behalf of the customer or to bring him and third parties to a contractual relationship. This branch of law separates and regulates the relationship between the two: this has become a more difficult area because states are not consistent in terms of the nature of a partnership. Some States opt for partnership as only a sum of the natural persons who have joined the company. Others treat the partnership as a business unit and give the company its own legal personality as a corporation. For example, in English law, a partner is the representative of the other partners, while in Scottish law „a [partnership] is a separate legal entity from the partners who compose it“[10] and therefore a partner is the agent of the partnership itself. This form of agency is inherent in partner status and does not result from an agency contract with a client. [Citation needed] The United Kingdom`s Partnership Act 1890 (which includes both England and Scotland) provides that a partner acting within his or her actual powers (express or implied) binds the partnership if he or she does something in the normal course of carrying out his partnership activities.

Even if this tacit authority has been revoked or limited, the partner has obvious authority unless the third party knows that the authority has been compromised. So if the partnership wants to limit a partner`s authority, it must explicitly inform the world of the restriction. However, there would be little difference in content if English law were changed:[11] The partners are binding on the partnership and not their co-partners individually. For this purpose, the knowledge of the interim partner is attributed to the other partners or to the company, if it is an independent personality. The other partners or the company are the customer and third parties are entitled to assume that the customer has been informed of all relevant information. This causes problems when a partner acts fraudulently or negligently and causes losses to the firm`s clients. In most states, a distinction is made between knowledge of the company`s general business activities and confidential matters that affect a customer. Thus, there is no attribution if the partner acts as a fraud against the interests of the company. Liability arising from tort is higher if the Company has benefited from the receipt of fee income for work performed negligently, even if only within the framework of the standard provisions of vicarious agent liability. Whether the injured party wishes to sue the partnership or individual partners usually falls within the jurisdiction of the plaintiff, since in most jurisdictions his joint and several liability exists.

If the Agent has an actual or obvious power of attorney, the Agent will not be responsible for the actions taken under that authority as long as the Agency`s relationship and the Client`s identity have been disclosed. .