An agent is a third party that has been given the legal right to represent a business (the "principal") and enter into contracts on that business' behalf.
A person or organization acting on behalf of another party is known as an agent. It has the authority to sign contracts on behalf of its principal. When operating in accordance with its obligations to that party, the agent may expose the principal to responsibility.
Without the legal structure that permits agents to represent firms, how we conduct business would be radically different. Every individual who represents a corporation as an employee in order to conclude a discussion or close a deal is functioning as the company's agent since corporations are themselves legal entities and lack the ability to represent themselves by nature.
There are three crucial aspects to the agent-principal relationship:
1. Through a written, verbal or even tacit agency agreement, the principal and agent agree to the existence of an agency relationship between them.
2. The agent has the same power as the principal to make decisions that affect the principal's legal standing, such as signing contracts that provide the principal with new rights and duties.
3. To guarantee that the agent acts properly and honorably on the principal's behalf, the principal exerts some control over the agent's behavior.
Depending on their level of power, agents are categorized into four types:
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