An agency relationship refers to a legal relationship where one party, known as the principal, empowers another party, known as the agent, to act on their behalf. This relationship can be created in several ways, but the most common way is through an express agreement.

An express agreement is an agreement that is explicitly stated, either in writing or verbally. In the case of creating an agency relationship, an express agreement outlines the rights and obligations of both the principal and the agent. It is crucial that both parties fully understand the terms of the agreement before entering into it.

When creating an agency relationship via express agreement, there are a few essential factors that need to be taken into consideration. These factors include:

The authority of the agent: The agreement must clearly state the scope of the agent`s authority. The agent must be authorized to act within the limitations of their role. The agreement should also specify the types of activities that the agent can carry out and any limitations on their authority. This ensures that the principal remains in control of the relationship.

The duties of the agent: The agreement should outline the duties of the agent. The agent must act in the best interest of the principal. They must perform their duties with care, diligence, and skill, and without any conflicts of interest. The agreement should also specify any duties that the principal expects the agent to perform, such as reporting requirements.

Compensation: The agreement should specify the compensation that the agent will receive for their services. This could be in the form of a commission, a salary, or a combination of both. The agreement should clearly outline the terms of payment, such as how often the agent will be paid and under what circumstances.

Liability: The agreement should also specify the liability of both parties. The agent must be held accountable for their actions while acting on behalf of the principal. The agreement should specify any indemnification provisions, such as who will be responsible if the agent engages in any illegal or harmful activities.

In conclusion, creating an agency relationship via express agreement is a great way to ensure that both parties understand the terms of the relationship. It is essential to take the time to draft a comprehensive agreement that outlines the authority, duties, compensation, and liability of both parties. This can help prevent misunderstandings and disputes down the line and ensure that the relationship is beneficial for both the principal and the agent.