What must a principal have over the agent to establish an agency relationship?

To establish an agency relationship, a principal must have control over the agent's actions. This control is a fundamental aspect of the agency relationship, as it defines the principal's ability to direct and guide the agent in carrying out specific tasks or representing the principal in transactions.

The essence of agency is that the agent acts on behalf of the principal and under the principal's authority. This means that the principal not only has the power to instruct the agent but also oversees the manner in which these instructions are carried out. The agent's acts are intended to benefit the principal, and the principal's control ensures that the agent is acting within the scope of the authority granted to them.

While the ability to revoke authority is an important factor, it is the control over the agent's actions that primarily establishes the relationship. A written agreement may be beneficial to clarify the terms, but it is not strictly necessary for an agency to exist. Lastly, while the principal generally bears financial responsibility for the actions of the agent performed within the scope of authority, this concept relates to liability rather than the establishment of the agency relationship itself. Thus, control over the agent's actions is the key element in forming the agency relationship.