Business Law course---&gtAgency--&gtPrincipal and Agent relationship Term Paper

Business Law course--->Agency-->Principal and Agent relationship - Term Paper Example However, creating a relationship between two parties involve certain crucial points, which are significant to be considered when creating an agency. These points principally includes mentioning the authorities of the parties involved, duties of the both the parties and liability of the parties involved among others in the contract. In similar regard, it would be worth mentioning that an agency relationship between two parties (the principal and the agent) must be beneficial for both; that is the principal will enjoy the privilege of getting his/her work done by others, while the agent will receive a considerable amount for the same (Floyd & Allen 212-250). THESIS STATEMENT In this paper, emphasis will be laid upon investigating and postulating the provisions in respect to agency creation and the subsequent relation built there upon between an agent and the principal. The significance of having an agency relationship will also be depicted up to an extent in this paper. From a primary point of view, there are several components identifiable as involved with the creation as well as the legal execution of an agency relationship. ... In such relationship a legal contract plays a vital role to ensure legal and ethical conducts of both the parties involved. The rights as well as responsibilities of both the parties are therefore, postulated to be based in accordance to the terms and conditions mentioned in the contract. In regard to creating an agency, the free consent of the both the parties involved, i.e. principal and agent, is of prime significance and a necessary issue. The principal, in this context, must have the desire that the agent will act on his behalf with a particular transaction or negotiation. Similarly, an agent will also have the right to choose his desire or confirm his free consent to perform on behalf of the principal. The intentions and expectations of both the parties is also required to be mentioned in the contract to avoid any sort of miscommunications or frauds of any kind in the course of their relationship. Correspondingly, the contract law will be applicable in this regard. In case, if one party intends to exercise control over the activities of the other, no relationship will exist between the two. An agency can only arise by the will of both the parties. There are two kinds of agencies, which comprise of actual and apparent agencies [Carr v. Hunt, 651 S.W.2d 875] (US Legal, â€Å"Creation of Agency†). AUTHORITY It has been noted from the above discussion that the relationship between an agent and a principal, primarily forms an agency, where the former acts on behalf of the later. Both of them enter in a contract, which further ensures certain authoritative responsibilities and rights for both of them. The authority in an agency is divided into several types based on their characterizations. Primarily, the authority of an agent is his/her power to act on behalf of the