Question

What are an Agency and Principle relationship in business?

Answer 1

Answer :-

Agency Relationship :-

A relationship between two parties in which one party (the agent) agrees to represent or act for the other party (the principal).

A legal relationship in which one person or entity (the principal) appoints another person or entity (the agent) to act on his behalf.

Duties of Agents:-

An agent must obey reasonable instructions given by the P. The A must not do acts that have not been expressly or impliedly authorized by the P. The A must use reasonable care and skill in performing the duties. Most importantly, the A must be loyal to the P.

Principal Relationship :-

principal is a person, legal or natural, who authorizes an agent to act to create one or more legal relationships with a third party.

Duties of Principal to Agent:-

Compensation (as specified in the contract), indemnification (to pay for losses agent incurs while acting for principal), reimbursement, good faith

Capacity of a Principal :-

If the principal is a minor or an incompetent not under a guardianship, his appointment of another of another to act as an agent is voidable as are any resulting contracts with third parties