Contract Glossary
Agency
Definition
A legal relationship where one person (the agent) is authorized to act on behalf of another (the principal). The agent's actions can bind the principal to contracts, obligations, and liabilities, even if the principal didn't directly agree to a specific deal.
In Practice
If you give your business partner authority to sign contracts on your behalf, that's an agency relationship. When they sign a $50,000 vendor agreement, you're bound by it, even if you didn't read the terms. Agency relationships can be created formally (power of attorney) or informally (implied by your behavior).
Common in these contract types
Related terms
Related contract clauses
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