Whatdoyouunderstandtheword“Agency”inlaw? (b)What are the relations between the Principal,Agent and the Third Party Under the law of agency?

The term "agency" in law refers to a fiduciary relationship where one party (the principal) grants another party (the agent) the authority to act on their behalf in business dealings or other legal matters. The agent is empowered to create legal obligations for the principal through their actions, within the scope of the authority granted. ### (b) Relations Between Principal, Agent, and Third Party 1. **Principal and Agent:** - The principal and agent have a fiduciary relationship, meaning the agent has an obligation to act in the best interest of the principal. This includes duties such as loyalty, obedience, disclosure, and care. - The principal is responsible for the actions of the agent within the scope of the authority granted to the agent. - The agent must act within their authority and not exceed it; otherwise, they may become personally liable for any unauthorized actions. 2. **Agent and Third Party:** - When an agent acts on behalf of a principal, the agent can enter into contracts or agreements with third parties. If the agent is acting within their authority, the principal is typically bound by the agreements made by the agent. - The agent may also have specific duties towards the third party, such as ensuring accurate representations and disclosures. 3. **Principal and Third Party:** - The principal can hold the third party accountable for any breaches or failures to fulfill their obligations under the contract made by the agent, as long as the agent acted within their authority. - If the agent exceeds their authority, the principal may not be legally bound to the third party unless the third party can establish that they had reason to believe the agent was acting within their authority. ### Summary In summary, agency involves a triadic relationship that defines the responsibilities and liabilities of each party involved: the principal, the agent, and the third party. The principal appoints the agent to act on their behalf, and the agent's actions can create binding obligations for the principal in relation to third parties. Each relationship entails specific duties and rights that ensure that the transactions are conducted fairly and responsibly.