AGENCY RELATIONSHIPS

Bhola Bhattarai
12th September 2018
 Definition
An Agency relationship is:

The fiduciary relation which results from

the manifestation of consent by one person to
another that the other person shall act in
his/her behalf and is subject
to his control; and consent by the other so to
act.
 Structure
•  In other words, one person (the agent) agrees to do
something for another party (the principal), subject to
the control of the other party, and the other party
(the principal) also agrees to the agreement. 
• It simultaneously means the principal is bound
(normally) by what the agent does, since  the agent is
acts as if the principal were there him/herself.
• It is a fiduciary and consensual relationship between
two “persons” where one person acts on behalf of the
other person and where the agent can form legal
relationships on behalf of the principal.
 Relationship
• It may be a business or personal relationship.
• It allows the principal the ability, if you will, to
be more than one place at a time, thereby
expanding their potential business
opportunities.
• Simply stated, the agent acts for the principal
as if it were the principal acting
 Principal & Agent
Principal: The person or entity on whose behalf and subject
to whose control an agent acts.  
 For example, your boss at work.
Agent: A person who agrees to act on behalf of and instead
of his or her principal, 
subject to the principal's control. A good example would be
an insurance agent.
• Generally, in a business relationship, the principal and
agent relationship requires being either an
employee/employer relationship or an independent
contractor.
 Fiduciary Duty
• Fiduciary: A person who undertakes to act on
behalf of and primarily for the benefit
of another.  For example, a trustee for a trust.
• Fiduciary Duty: A duty arising
from the trust and confidence placed in a
fiduciary by those on whose behalf and for
whose benefit he or she acts.
• Person:  a natural person, corporation,
partnership or other recognized entity
 Principles of Fiduciary Duty
• Establishment and Announcement of the Policy
concerning Fiduciary Duties;
• Pursuing the Best Interest of the Clients;
• Appropriate Management of Conflicts of Interest;
• Clarification on Fees, etc.;
• Provision of Important Information that is Easily
Understandable to the Client;
• Provision of Services Suitable for Each Client; and
• Establishing the Framework for Appropriately
Motivating its Personnel to Comply with Fiduciary
Duties.
 Principles of Partnership
• Everyone desires respect
• Everyone needs to be heard
• Everyone has strengths
• Judgments can wait
• Partners share power
• Partnership is a process
Thank You