Agency By Necessity

Definition of 'Agency By Necessity '


A type of relationship whereby one party can make essential decisions for another party. Agency by necessity is recognized in the courts and typically applies when one party is unable to make.

Investopedia explains 'Agency By Necessity '


If, for example, an individual is sick and unable to make a critical decision, agency of necessity would allow an attorney, parent or spouse to make decisions on behalf of the incapacitated party.

Agency by necessity refers to a situation where an agent by necessity makes a critical decision on behalf of another party who is not in a condition to do so. For example, if Person A was severely injured in a car accident and was in a coma, Person B could make the decision to allow medical staff to operate on Person A. Under normal circumstances, Person A would have to give consent, but if he or she was unable to do so, an agent can make the decision instead.



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