What is the relationship between the principal and the agent?
What Is the Principal-Agent Relationship? The principal-agent relationship is an arrangement in which one entity legally appoints another to act on its behalf. 1 In a principal-agent relationship, the agent acts on behalf of the principal and should not have a conflict of interest in carrying out the act.
Who can act as an agent between the principal and third person?
184. Who may be an agent. —As between the principal and third person any person may become an agent, but no person who is not of the age of majority and of sound mind can become an agent, so as to be responsible to his principle according to the provisions in that behalf herein contained.
How does a principle become liable to third parties on contracts?
A principal is liable to third parties for contracts that an agent makes if the agent is acting within the scope of the agent's express, implied, emergency, or apparent authority.
Which theory is the relationship between two parties where one is principal and other is an agent?
Agency theory is a principle that is used to explain and resolve issues in the relationship between business principals and their agents. Most commonly, that relationship is the one between shareholders, as principals, and company executives, as agents.
What happens if a third party discovers a principal?
If the third party has discovered that there is a principal, he may file a suit against the principal, or his agent or both. In such a case, the third party must allow the principal, the benefit of all payments received by him from the agent.
Can a third party sue the principal of a contract?
In such cases, the other party may sue either the principal or the agent or both. The principal if he likes may also require the performance of the contract from the other party. But in such a case, he should allow, the benefit of all payments made by the third party to the agent, to the third party.
What is the liability of the principal to a third person?
The liability of the principal to a third person upon a transaction conducted by an agent is based upon facts such as: the agent was authorized; the agent was apparently authorized; or the agent had a power arising from the agency relation and not dependent upon authority or apparent authority.