agency
Definition
Agency is a legal relationship where one person or business (the agent) has the authority to act on behalf of another person or business (the principal). When the agent makes a deal or signs a contract within that authority, it legally binds the principal just as if they had done it themselves.
Example
If you hire a purchasing manager and give them the power to buy supplies for your shop, their orders are your orders and you owe the money even if you weren't in the room.
Watch Out
Be careful about who you give authority to act on your behalf, because you can be held responsible for their actions even when they go beyond what you actually intended.
See which terms appear in your contract?
This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.