As a copy editor with experience in SEO, I understand the importance of providing valuable and informative content to readers. In this article, we will be discussing the nature of agency agreements and what it means for businesses and their partners.

An agency agreement is a legal contract between two parties, where one party (the agent) agrees to act on behalf of the other party (the principal). This agreement allows the agent to perform certain tasks or services on behalf of the principal, such as selling products or managing a project.

The nature of an agency agreement is based on two key principles: fiduciary duty and agency authority. Fiduciary duty refers to the legal obligation that the agent has to act in the best interest of the principal. This means that the agent must prioritize the principal’s interests above their own.

Agency authority, on the other hand, refers to the agent’s power to act on behalf of the principal. This authority can either be express or implied. Express authority is granted through the terms of the agency agreement, while implied authority comes from the agent’s actions that are necessary or customary to complete their duties.

Types of Agency Agreements

There are several types of agency agreements that businesses and partners can enter into. These include:

1. Agency by Agreement: This type of agency agreement is formed through a written or verbal agreement between the principal and agent.

2. Agency by Ratification: This occurs when an agent performs an act on behalf of the principal without prior authorization. The principal can then accept or reject the action.

3. Agency by Estoppel: This type of agency agreement is based on the principle of estoppel, which means that a person is prevented from denying a fact that they have previously acknowledged. For example, if a business allows an individual to act as their agent even though they do not have the authority to do so, they cannot later deny that the individual was acting as their agent.

Agency agreements can also be classified based on the level of authority granted to the agent. These include general agency, specific agency, and universal agency.

General agency grants the agent broad authority to act on behalf of the principal in a variety of matters. Specific agency, on the other hand, limits the agent’s authority to specific tasks or services. Universal agency grants the agent almost unlimited authority to act on behalf of the principal.


In conclusion, agency agreements are an essential part of business operations. They allow businesses to delegate certain tasks and services to agents, while maintaining control over the outcome. Understanding the nature of agency agreements is critical in ensuring that businesses and their partners operate within legal boundaries and with each other’s best interests in mind.