Agency by Express Agreement Meaning: Everything You Need to Know

When it comes to business transactions, agency plays a significant role. Agency refers to the legal relationship between two parties, where one party (the agent) is authorized to act on behalf of the other party (the principal). There are various ways in which agency can arise, and one of them is through express agreement. In this article, we will explore what agency by express agreement means, its key features, and examples.

What is Agency by Express Agreement?

Agency by express agreement is a form of agency that arises when the principal and agent explicitly agree to create an agency relationship. Unlike agency by implied agreement, where the agency relationship is inferred from the parties` conduct or circumstances, agency by express agreement is formed through a formal agreement between the principal and agent.

To create an agency by express agreement, the following elements must be present:

1. Mutual Consent: Both the principal and agent must agree to create an agency relationship.

2. Authority: The principal must authorize the agent to act on their behalf, and the agent must accept the authority.

3. Control: The principal must have the right to control the agent`s actions within the scope of the agency relationship.

Key Features of Agency by Express Agreement

1. Formal Agreement: Unlike agency by implication, the agency by express agreement is formed through a formal agreement between the principal and agent. The agreement can be in writing or oral.

2. Defined Scope: The agency by express agreement outlines the specific tasks that the agent is authorized to perform on behalf of the principal. The scope of the agency relationship must be clearly defined in the agreement.

3. Agent`s Duties: The agent has a duty to act in the principal`s best interest and to follow their instructions within the scope of the agency relationship. They must also keep the principal informed of any significant developments.

4. Principal`s Duties: The principal has a duty to compensate the agent for their services, reimburse them for any expenses incurred, and indemnify them against any losses suffered while acting within the scope of the agency relationship.

Examples of Agency by Express Agreement

1. Real Estate Agency: When a property owner hires a real estate agent to sell their property, they create an agency relationship by express agreement. The property owner authorizes the agent to act on their behalf and outlines the specific tasks the agent is authorized to perform, such as marketing the property, finding potential buyers, negotiating the sale, and completing the transaction.

2. Employment Agency: When a company hires an employment agency to recruit and hire employees, they create an agency relationship by express agreement. The company authorizes the employment agency to act on their behalf and outlines the specific tasks the agency is authorized to perform, such as posting job advertisements, screening resumes, conducting interviews, and making job offers.

Conclusion

Agency by express agreement is a crucial concept in business transactions. It arises when the principal and agent explicitly agree to create an agency relationship. The key features of agency by express agreement include a formal agreement between the parties, a clearly defined scope of authority, duties of both the principal and agent, and compensation for the agent. Examples of agency by express agreement include real estate and employment agencies. Understanding agency by express agreement and its key features can help parties create business relationships that are legally binding and mutually beneficial.

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