Legally, when is an agency relationship created?
An agency relationship are formed between two parties when one party agrees to represent the other party (the principal). A principal-agent relationship is fiduciary, meaning it is based on trust. Normally, all employees who deal with third parties are considered agents. As such, an agency relationship is governed by employment laws.
Agency Relationship is Formed by following ways :-
1.Agency by agreement: - This is the most common way. Both sides agrees on certain condition. This agreements can be formed by either an express contract or by a simple conversation and handshake.
2.Agency by ratification:-A party can agrees to be an agent through a third party. As long as the principal is then notified and approves the agreement, an agency relationship is formed.
3.Agency by estoppel: There are times when your actions represent to a third party that another person is your agent (when in fact the person is not). If the third party reasonable believe this is true, a court will prevents us from denying that the agency exists. Estoppel is also known as detrimental reliance.
4.Agency by operation of law:- Sometime courts will step in and deem a person to be an agent even if there was no agency agreements. Courts only do this to prevent a party from suffering injustice.
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