What is the primary legal relationship defined in the context of an agency?

In the context of agency, the primary legal relationship is a fiduciary one, where one party, known as the agent, is authorized to act on behalf of another party, referred to as the principal. This relationship is characterized by trust and the responsibility of the agent to act in the best interests of the principal. The agent must adhere to the duties of loyalty, care, and obedience, ensuring that they prioritize the interests of the principal in their actions.

The concept of agency involves the agent being empowered to make decisions and carry out actions that can create legal obligations for the principal. Examples include a real estate agent selling a property on behalf of a homeowner or an attorney representing a client in legal matters. The essence of this relationship lies in the fiduciary duty, which mandates a heightened standard of care and loyalty compared to other types of agreements.

While other options touch on related concepts, they do not capture the specific nature of the agency relationship accurately. The idea of agency as a contract-based agreement does not fully encapsulate the fiduciary responsibilities inherent in this relationship. Similarly, defining agency strictly as an employment relationship overlooks the broader scope of actions an agent may undertake on behalf of a principal, which can extend beyond traditional employment contexts. Lastly, describing agency as