Also known as: principal agent theory · principal-agent · agency theory · agency relationship · principal and agent
Written by attorneys · grounded in primary & secondary sources — see below
2 senses
A fiduciary relation that results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act. The relation can arise without any exchange of consideration between the parties.
A fiduciary relation that results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act. The relation can arise without any exchange of consideration between the parties.
Select any source to read its text and confirm it supports the definition.
Inherent agency powers flow solely from the relation itself and bind the principal even when the agent's acts exceed actual or apparent authority.
Select any source to read its text and confirm it supports the definition.
Inherent agency powers flow solely from the relation itself and bind the principal even when the agent's acts exceed actual or apparent authority.
Each sense below has its own examples, sources, and questions.
Harborview Hotels invited Lina to staff a lobby desk labeled Guest Services and promoted her on its website as arranging tours for guests. Lina agreed to staff the desk daily and book excursions, earning commissions only from tour operators while the hotel retained none of the revenue. The hotel's manifestations and Lina's consent created an agency relationship even though no payment passed between them.
No. The relation of principal and agent can be created although neither party receives consideration. An unpaid arrangement still satisfies the requirements of manifestation and consent when the putative agent agrees to act on the principal's account.
Supporting sources
The principal must manifest to the agent that the agent may act on the principal's behalf, and the agent must consent to so act. No special formality or written contract is required. The focus is on actual manifestations and agreement.
Supporting sources
No. Parties may describe someone as an independent contractor, but courts examine whether the principal manifested that the person may act on its behalf and whether the person consented. A label does not control when the elements of manifestation and consent are satisfied.
Supporting sources
Maple Wireless employed Jack as a regional network engineer who regularly met commercial customers to assess needs and coordinate service. Jack assured White Telecom of discounted dedicated fiber rates and priority restoration. White Telecom relied on those assurances and purchased equipment, binding Maple Wireless through inherent agency power arising from Jack's position even though the specific pricing terms had not been authorized.
Inherent agency power exists solely because of the agency relation and binds the principal even when the agent's acts exceed actual or apparent authority. It protects third parties harmed by or dealing with the agent in situations peculiar to the relation, such as a servant's acts within the scope of employment.
Supporting sources