First Principles of Business Law

2. Agency relationships

2.1. The nature of agency

In the previous section, we saw how agency involves a number of different ideas. One is that agency is concerned with representation - an agent acts on behalf of their principal. Another aspect of agency is that the agent brings about changes to the principal's legal position, rather than the agent's own. A third aspect of agency is that a third party is usually involved, that is, a person who deals with the principal through the agent.

It is now time to consider the agency situation in more detail. There are a number of important questions. For example:

• In what situations is agency likely to arise?
• What is the nature of the relationship between an agent, principal and third party?
• What sort of things can validly be done by an agent for their principal?