Agency enables one person, the agent to represent the interests of another, the principal. The agent is authorised by the principal to create or affect legal relations between the principal and a third party. Common examples of an agency relationship are a company and its directors, brokers, partners in a firm and the solicitor/client relationship. The agency relationship is a fiduciary one. Agents have become a necessary part of commerce given the need for businesses to use other people to act on their behalf.

To create an agency relationship you need:

• a principal and an agent;

• consensus between the parties that the agent will act on behalf of the principal and be subject to the principal’s control; and

• capacity of the parties to act.

See The definition and elements of agency.

Agency can be distinguished from other legal relationships such as trusts and bailment as each have their own but different characteristics.

See Agency and other legal relationships.

Often agents are classified depending on their level of authority as special agents, general agents or universal agents. An agent’s level of authority can be determined from the agency agreement or the conduct of the parties or from the agent’s position. For example, the managing director of a company has the implied authority to do all those acts that fall within the usual scope of that office. Alternatively, an agent can be said to have had “apparent authority” (also called “ostensible authority”) arising from the principal’s representations to a third party. If the principal creates the impression that the agent is authorised to act, then they are estopped from later denying the authority of the agent.

See Classification and types of agent.

See Types of authority — express/implied/ostensible.

Nationally, there are numerous pieces of legislation that to varying degrees create or affect the agency relationship.

See Legislation.