What role does control play in an agency relationship?

In an agency relationship, control is crucial as it establishes the limits of the agent's decision-making authority. This means that the principal defines the scope within which the agent can operate. The principal exerts control over the tasks the agent is authorized to perform and the decisions they are allowed to make on behalf of the principal.

This control is essential because it helps clarify the expected duties and the extent of the agent's powers, ensuring that the agent acts in the principal's best interests while adhering to the guidelines set forth by the principal. For instance, if an agent has control to make business transactions but not to sign contracts, this distinction helps prevent unauthorized actions that could bind the principal financially or legally.

In addition, this distinction between the authority that has been granted and what is beyond it protects the interests of both the principal and the agent, as it provides clarity on accountability and responsibilities within their business relationship. Therefore, understanding how control defines the agency relationship is integral to navigating legal aspects of agency law.