This chapter examines the key provisions of the law of agency. It highlights the importance of agency for the business sector and explains that an agency is a specific form of legal relationship between two persons whereby one person appoints another person to act on his behalf. An agency can be created by express or implied agreement, through the agent’s apparent authority, and when the principal ratifies the purported agent’s act. This chapter also discusses the duties and rights of the principal and agent, and the relationships that exist between agent, principal, and third party. Finally, the chapter discusses the various ways in which a relationship of agency can be terminated.
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8. The law of agency
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18. Businesses and the Responsibility to Agents
This chapter identifies agency relationships, their prevalence in business, and how the agency exists to bind the principal in contracts with third parties. It begins by defining agency as the relationship that exists between two persons when one, called the agent, is considered in law to represent the other, called the principal, in such a way as to be able to affect the principal’s legal position in respect to strangers to the relationship by the making of contracts or the disposition of property. Agencies exist in corporate organizations, sole trader, and partnership trading structures, and the law in this area applies to many relationships and is frequently seen in commercial enterprises, including high street retailers, between partners, and the directors of a corporation.
