Agency (law)

From Academic Kids

Agency is an area of law dealing with a contractual or quasi-contractual relationship between at least two parties in which one, the principal, authorizes the other, the agent, to represent her or his legal interests and to perform legal acts that bind the principal. The agent has a fiduciary relationship with and is under a legal duty to act in the best interests of the principal. An agency can be expressly created for various purposes by contract or appointment, but it can also be implied from the conduct of the parties. Both an "attorney-in-fact" and an "attorney at law" are agents. In the former the agent is given a "power of attorney" also known as a mandate in civil law jurisdictions.

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Agency relationships

Agency relationships are common in many professional areas.

The negotiation of entertainment and sports deals and in many day to day transactions where one person (the "agent") is allowed to stand in for another individual to fulfill their wishes. Models, actors, and athletes have agents who secure opportunities and benefits for them. In publishing an agent acts for an author to sell their manuscript. Publishers often pay greater attention to manuscripts submitted by an agent than directly (via the slush pile).

Agents can represent the interests of one party, or they may represent the interests of several, conflicting or potentially conflicting parties. In the case of such dual agency the agent must either disclose information received by one party to the other or act in a limited agency capacity to prevent a situation where the agent's loyalty to the multiple principals is compromised.

Types of agency

  • Universal agency provides broad authority for agent to act on behalf of principal.
  • General agency limits agent authority to a particular type of transaction or business; agent may bind principal.
  • Special agency is also called "limited agency"; agent is not able to bind principal.

Creating agency

  • Express authority is given in a written contract that defines positions, duties, and expectations of parties
  • Implied authority is the agent's right to act where it is customary or the norm in the specific business context
  • "Ostensible" agency is when actions cause a third party to assume someone is an agent
  • Agency by estoppel is created when an agent's unauthorized activity causes a third party to believe the agent has that authority.
  • Agency by ratification occurs when the unauthorized action of the agent is accepted by the principal after the fact


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