Agency: Definition Flashcards
What is “agency”?
“The word “agency”, used in a legal context, refers to a relationship, usually created by contract, in terms of which the principal instructs the agent to act on his behalf in order to produce legally binding effects for the principal.”
What kind of contract is an agency?
Tri-partite contract.
Since there are three parties involved, it creates some complexity in terms of contract law. Usually, the agent is working in a representative capacity to form a contract between the principal and the third party. As such there is more than one contract (agent - principal + principal - third party).
Who is an agent?
“a person who has authority to act for and on behalf of another (called the principal) in contracting legal relations with third parties; and the agent representing the principal creates, alters, discharges legal obligations of a contractual nature between the latter and third parties”.
What is the nature of the agent/principal relationship?
The principal - agent relationship is fiduciary in nature; the agent must show a high degree of loyalty to the principal.
What is a mandate?
If the contract is gratuitous then the relationship is usually known as mandate - mandate (principal) and mandatory (agent), rather than principal and agent. This is uncommon in commercial spheres.
