Definition:

Agency transactions are transactions that involve an agent acting on behalf of a principal. In these transactions, the agent has the authority to enter into contracts or agreements on behalf of the principal.

Key characteristics of agency transactions:

  • Principal-agent relationship: There is a clear principal-agent relationship, where the agent acts on behalf of the principal.
  • Authority: The agent has the authority to act on behalf of the principal.
  • Liability: The principal is generally liable for the actions of the agent, unless the agent acts outside the scope of their authority.

Examples of agency transactions:

  • Real estate agents: Real estate agents act as agents for sellers or buyers of property.
  • Insurance agents: Insurance agents act as agents for insurance companies.
  • Corporate officers: Corporate officers act as agents for their companies.

Why are agency transactions important?

  • Efficiency: Agency transactions can be more efficient than having principals directly involved in all transactions.
  • Expertise: Agents often have specialized knowledge or expertise in a particular area.
  • Liability: Understanding agency transactions is important for determining liability in case of disputes or legal issues.

In essence, agency transactions are transactions that involve an agent acting on behalf of a principal, and they are a common occurrence in many businesses and industries.