What Is an Agency Agreement?

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What Is an Agency Agreement?

An agency agreement is a document that is used to create a principal-agent relationship. This is where one party (the principal) allows another party (the agent) to make legal decisions and act on their behalf. Agency agreements usually provide general instructions regarding the project to be completed, or regarding the relationship in general.

An example of an agency agreement is in an employment setting, where a supervisor authorizes a worker to perform a certain project. Here, an agreement may be drafted that details the different duties of the agent.

When Are Agency Agreements Used?

Agency agreements are often used in situations where one party needs to act on behalf of the other. This can include situations such as:

What Should Be Contained in an Agency Agreement?

An agency agreement should contain information such as:

What If an Agency Agreement Is Violated?

In the event that an agency agreement is violated, a lawsuit can be filed and a damages award may be issued to the non-violating party. In some cases, the agent may be held liable for losses caused to the principal (for instance, if the principal lost business profits because the agent did not follow the agreement). Or, the opposite can occur, where the principal becomes liable for failing to uphold their agreement with the agent (such as failing to compensate them for labor).

Lastly, other parties can often sue either the principal or agent. An example of this is where the principal assigns and agent to do construction for a customer. If the construction is not satisfactory, either the principal or the agent might be held liable for the losses depending on the facts of the case.

Do I Need a Lawyer for Help with an Agency Agreement?

Agency agreements are an important aspect of many businesses and employment arrangements. You may need to hire a lawyer if you have any legal questions or issues regarding agency agreements. Your lawyer can provide you with insight regarding the relevant laws in your area. In the event of a lawsuit, your attorney can help you file your claim and can assist you in obtaining a monetary damages award.

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Last Modified: 11-20-2014 12:21 PM PST

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