157Topic list Syllabus reference
1 Role of agency and agency relationships D1(a)
2 Formation of agency D1(b)
3 Authority of the agent D1(c)
4 Relations between agents and third parties D1(d)Agency law
Introduction
In this chapter we examine how an agency relationship arises and how the
agent's authority is acquired and defined. Agency is the foundation of most
business relationships where more than one person engages in commerce
together. Examples include partnerships and companies, which we shall
introduce in the next chapter.
'Agents' are employed by 'principals' to perform tasks which the principals
cannot or do not wish to perform themselves. This is often because the
principal does not have the time or expertise to carry out the task.
If business people did not employ the services of agents, they would be
weighed down by the contractual details, and would probably get little else
done!
When parties enter into an agency arrangement, the principal gives a measure
of authority to the agent to carry out tasks on their behalf. The agent contracts
and deals with third parties on behalf of the principal.