An agency is an agreement between two people where one agrees to be the agent for the other. The two people are Principal (the person who authorizes and controls the agent and indicates that the agent will work on his behalf) the other party is the agent who is authorized to act on behalf of the principal, often in negotiating and entering contracts. An agency is a fiduciary relationship. Because the agent has the authority to act on behalf of the principal, because of that the principal is liable for the acts of the agent as long as the acts are within the scope of the agency.
Any person who has capacity to enter a contract can be a principal. Capacity is attained by having the appropriate mental capacity and have attained the appropriate age.
Employer- Employee relationship vs. Agent- Principal
An agent always has some degree of authority to act on behalf of their principals.
Employees do not have authority to act on behalf of the employer.
Not all agents are employees but you can be both.
A proprietor in an independent contract. An independent contractor is a person who is hired to perform a job but they have the authority to do what and when they want as long as they get the job done basically the contractor’s hours cannot be controlled. Independent contractors are not employees but they might be agents.
Liability is the reason why we care about this.
Contractual liability: - The principal is bound to contracts with the agent within the scope of the agency.
An employer is not bound to a contract entered by an employee unless specified. Same as an independent contract.
Tort Liability:-The doctrine of respondent superior, employers are held liable for the torts committed by the employees as long as the torts are committed within the employment.
There are 3 situations when a Proprietor might be held liable Independent contract * Negligence hiring e.g. hire an incompetent person * Negligence retention e.g. hire an incompetent person, know that they are incompetent and still keep them. * None delegable duties e.g. Delegating duties or responsibilities that aren’t allowed to be delegated
Criminal liability:- Principals and employers are usually not liable for criminal acts committed by their employees. Exemptions are Criminals act to continue your illegal business There are certain statues that impose liability For acts of managers who act within the scope of employment.
Different types of Principals and Agents
Principle types 1. A disclosed principal: - the principal is known by the third party. 2. Undisclosed principal: - Agency doesn’t reveal that there is an agency relationship 3. Partially disclosed principal:- this is where the 3rd party knows there is a principal but doesn’t know who it is

Agent types 1. General agent: - has day to day authority in conducting the principals business e.g. Manager 2. Special agent:- Has the authority to perform a specific task e.g. Lawyer for a will 3. Factor agent: - sells consigned merchant on behalf of the principal. A delcredere is a specific person who guarantee the credit of the buyer to the principal.

In the case of undisclosed principal, the principal can be liable for the agent’s actions until the principal’s identity is disclosed.
In a partially disclosed case, the agent might be liable
Factor agent, agent is liable if they act outside the employment lines.

Since an agent can be anyone, the principal cannot avoid a contract before the minor’s age.
All corporations use agency law.

Ways in which agency relationship can be created. 1. By appointment: - express agreement, can be written or oral where the principal appoints someone to act on their behalf e.g. Power of attorney. The equal dignity rule applies here, if hiring of the agent must be in writing, his actions must also be in writing 2. By implication: - actions look like an agent 3. Agency by necessity: - the situation someone acts on