What is an agency relationship in business transactions?

An agency relationship in business transactions is when two parties enter into an agreement for one party to be an agent for another. The agent then has to act on behalf of the other party in a transaction. The party being represented is known as the principal, while the one representing them is the agent. In Washington, the Washington State Bar Association defines agency in business transactions as a “legal relationship in which an agent is authorized to act on behalf of a principal and to enter into binding contracts with third parties.” This means that when a principal entrusts an agent to enter into transactions or conduct business, the agent must act on behalf of the principal. The agent must also abide by certain obligations, including acting in the best interests of the principal and not engaging in activities that would conflict with the principal’s best interest. This responsibility is known as a fiduciary duty and is essential when it comes to an agency relationship in business transactions. The agent is also required to provide a duty of loyalty to the principal and be honest and act with due care when it comes to the principal. In the event of a dispute, a court can also hold the agent liable for any of the principal’s losses. Overall, an agency relationship in business transactions is a legal agreement between two parties whereby one is appointed to act as an agent on behalf of the other. This relationship includes obligations and duties for both the principal and the agent that must be met. It also brings with it both risks and rewards for both parties involved.

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What is an agency relationship in business transactions?

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