What defines the agency relationship?
The agency relationship primarily refers to the agreement between a principal and agent, giving the agent authority to act for the principal. Though additional laws and ethics codes may guide specific contexts, such as real estate, the principal-agent agreement is foundational to the concept of agency.
The Agreement Between Principal and Agent
In the realm of business and legal relationships, the agency relationship holds significant importance. It is defined primarily by the agreement between a principal and an agent, wherein the agent is authorized to represent the principal in various matters.
Laws of Agency
The laws of agency, along with specific statutes in some states, provide the legal framework for the agency relationship. These laws outline the rights, duties, and responsibilities of both the principal and agent, ensuring that the relationship functions within the bounds of legality and ethical standards.
Real Estate Contracts
In the context of real estate transactions, the agency relationship may be guided by the law of real estate contracts. This legal framework dictates the terms and conditions under which agents represent clients in buying, selling, or leasing property.
REALTOR® Code of Ethics
Additionally, the REALTOR® Code of Ethics plays a significant role in governing the conduct of real estate agents. This code sets forth ethical standards and practices that agents must adhere to when representing clients in real estate transactions.
Overall, the agency relationship is fundamentally rooted in the agreement between a principal and an agent, granting the agent the authority to act on behalf of the principal. While laws of agency, real estate contracts, and ethics codes may provide further guidance in specific contexts, they all stem from the core concept of the principal-agent agreement.