An agency relationship is a contractual agreement that confers a
wide range of rights, duties and liabilities towards the principal.
The above performances are between the principal and the agent in
the course of trade with a third party. The following discussion
explores the risks and benefits that face principals where they
contemplate to enter into agreements of agency.
Parties
The term principal refers to a proprietor who appoints another
person with instructions to act as their representative in
transacting with third parties. An agent is a person hired by the
principal to conduct business with third parties on their behalf.
The agent must therefore act within the scope of the agreement so
as to be indemnified from any liability.
