What is the concept of agency in business transactions?

Agency in a business transaction is a legal concept that is based on the idea that one party (the “principal”) can have someone else (the “agent”) act on their behalf. This type of arrangement applies to many different kinds of business transactions, such as real estate, marketing agreements, and distribution contracts. Under California law, an agency relationship is created when a person authorizes another to act on their behalf and to take actions, make decisions, and/or make representations that are binding on the principal. The agent then carries out acts on behalf of the principal in accordance with the authority given. The concept of agency is important because it allows the principal to enter into transactions without having to be present or to take any action. It also clarifies who is responsible for any obligations that may arise under the transaction, such as paying the other party or ensuring that the transaction is fulfilled. Finally, the concept of agency helps to define the rights and responsibilities of both the principal and the agent in a transaction. This includes details such as how the agent will be compensated for their work, as well as any limitations on the agent’s authority, such as what types of decisions they are allowed to make.

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What is the concept of agency in business transactions?

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