Last edited 02 Feb 2018

Agency

Agency is a legal term for a fiduciary relationship created between two parties, in which the agent is obligated to perform a service or supply goods for the ‘principal’.

When agency is formed, the principal authorises the agent to undertake certain acts for them and on their behalf, and they are bound by the acts of the agent. For example, one type of agency is between an employer (principal) and employee (agent).

Agency is an essential part of commercial and financial transaction as a legal entity such as a business can only function through its agents.

Agency can be created by:

  • Express agreement (oral or written).
  • Implication.
  • The principal’s conduct.

The legal doctrine of estoppel prevents the principal from rejecting or denying the existence of agency where they have previously established it.

In the construction industry, the term 'agent' is often used in relation to:

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