The agency relationship is very prevalent in businesses today. Simply said, agents have legal authority to act on behalf of the principal in business transactions. Since most of us will act as an agent or a principal in our professional careers, it is important to understand the agency relationship.

Often we try to avoid any liability, especially if someone else is the direct cause of an injury. However, if someone was acting on our behalf, we might be in an "agency" relationship and may not be able to escape liability.  

The agent has the ability to act on behalf of the principal. In order for a true agency relationship to work there needs to be trust between the principal and the agent. The agent has the ability to create legal obligations for the principal, so without trust as part of the relationship the principal can be put into undesired situations. 

 

• Examine when the agency relationships exist and the potential liability to both the principal and the agent.
• Identify a few examples of what can help identify the difference between an independent contractor and an employe