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:
- Employer's agent - an agent acting on behalf of a client as the contract administrator for design and build contracts.
- Estate agent - acting on behalf of a client for the sale or rental of properties, businesses or land.
- Sub-agents - usually appointed on large construction projects to manage a specific part of the works or a specific package of work.
- Client's agent of client's representative - responsible for managing a project on behalf of a client.
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