Agent Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Agent, written in plain English, along with examples of how it is used.
What is Agent?
n. it describes a situtation in which a principle leads a third party to believe that an agent has authority to bind the principle, even where the agent lacks the actual authority to bind the principle, hence the authority is seemingly clear but not necessarily so. There must be some act or some knowing omission on the part of the principle – if the agent alone acts to give the third party this false impression, then the principle is not bound. For instance, providing Joe Slobovia, who does not have authority to contract, with materials, stationary, forms, a truck with a company logo, or enabling him to work out of the company office, so that a reasonable person would believe that Joe had authority to act for the company, can grate apparent authority. Therefore, if Joe gives a contract or price quote that is accepted by a third party, it is binding on the company. Apparent authority may also arise when Joe works for the company, has no authority to contract, but appears to have been given that authority.
History and Meaning of Agent
The term "agent" has been used for centuries and refers to a person authorized to act on behalf of another person or entity, known as the principal. In legal terms, the relationship between the agent and principal is known as agency. An agent is a fiduciary who owes the principal loyalty and must act in the best interests of the principal. The authority granted to an agent may be express or implied, but in either case, the agent must act within the scope of that authority.
Examples of Agent
- A real estate agent is an example of an agent acting on behalf of a principal. The agent is authorized to buy, sell or rent real estate properties for the principal.
- A lawyer acting on behalf of a client is also an agent. They have the power to negotiate settlements, represent their clients in court, and make legal decisions on their behalf.
- An insurance agent works for an insurance company and is authorized to sell insurance policies to customers on behalf of the company.
- A travel agent is authorized to book and sell travel packages, flights, and hotels on behalf of the travel company or another principal.
- A financial advisor is another example of an agent acting on behalf of a principal. They are authorized to invest money, sell securities, and make financial decisions on behalf of their clients.
Legal Terms Similar to Agent
- Principal: The person or entity for whom the agent is acting.
- Fiduciary Duty: The legal obligation of the agent to act in the best interests of the principal.
- Agency: The legal relationship between the agent and principal where the agent is authorized to act on behalf of the principal.