Termination of an Agency Relationship

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What Is an Agency Relationship?

An agency relationship is formed between two parties when one party (the agent) agrees to represent another party (the principal). A principal-agent relationship is fiduciary, meaning it is based on trust. Normally, all employees who deal with third parties are considered agents. As such, an agency relationship is governed by employment law.

How Can an Agency Relationship be Terminated?

There are many ways to terminate an agency relationship. Once the relationship is terminated, the agent no longer has authority to act for the principal. The principal is required to inform third parties (that dealt with the agent) that the agency relationship has been terminated. Ways to terminate an agency relationship include:

Are There Penalties for Wrongful Termination of an Agency Relationship?

Laws that govern agency relationships are based on both contract and employment law. If an agency is wrongfully terminated, one party can sue the other for:

Seeking Legal Help

Termination of an agency relationship can be quite complex. Since both contract and employment law are involved in agency law, you should consult an experienced employment attorney to advise you on the best way to terminate an agency relationship without encountering legal pitfalls.

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Last Modified: 10-03-2014 07:45 AM PDT

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