An agent is a person appointed with the power to act on behalf of another person, the principal, and has the power to legally bind a principal to arrangements pursuant to their agency relationship. In other words, a principal confers authority to an agent to do certain things on its behalf.
An agency relationship has a fiduciary nature that imposes certain duties on an agent, including:
- A duty to perform their obligations with care, skill and diligence in the best interests of the principal;
- A duty to avoid conflicts between their own interests and the principal’s interest; and
- A duty to strictly act on the principal’s lawful instructions within the scope of authority conferred.
There are three main types of agents:
- Special agents – agents that are authorised to conduct either only a single transaction or a specified series of transactions over a limited period of time;
- General agents – agents that that hold an authority to conduct a series of transactions over a continuous period of time and have the authority to bind the principal in all matters dealt with in a particular business or profession; and
- Universal agents – agents that may be appointed under a power of attorney and hold broad authority to act on behalf of a principal and have unlimited power to transact with third parties on their behalf.