Regulations and Requirements - Agency
Characteristics of agency
Agency is a relationship between two parties, one a principal and the other an agent who represents the principal in transactions with a third party. An agent may bind the principal in a contract with the third party and usually enjoys a degree of independence. An agent is distinct from an employee or independent contractor.
An agency relationship may be formed for any legal purpose. An agency agreement may be expressed in writing, orally or implied.
Agent's duties to the principal
- Duty to perform - Carry out agreed functions.
- Duty of notify - Inform the principal of material information relating to the agency.
- Duty of loyalty - Agent cannot compete against the principal or use information obtained through the relationship for his own benefit or for the benefit of others.
- Duty to account - Report to the principal on the results of actions undertaken on the principal's behalf.
Principal's duties to the agent
- Duty to perform - in accordance with contract with agent.
- Duty to compensate, indemnify and reimburse - the agent for efforts under terms of agreement.
- Duty to cooperate - with the agent as the agent acts on the principal's behalf.