The legal relationship between principal and agent

The blue line indicates an agent's personal legal relationship with the principal.

The line is dotted because the nature of this relationship can vary. In most commercial situations, a contractual relationship exists between the principal and the agent. This is often a contract of employment, but is does not have to be.  In fact an agent can be given a power to represent a principal without there necessarily being a contractual relationship between them at all.

In some cases, the agency relationship arises out of a particular situation, such as an emergency, or from the mere fact of the two parties living together as spouses. More details of these different situations are found later in this module.