Why is consent important in forming an agency relationship?

Consent is crucial in forming an agency relationship because it allows for a mutual agreement on the responsibilities and expectations of both the principal and the agent. In any agency relationship, the principal gives the agent the authority to act on their behalf, which requires clear communication and agreement on the scope of that authority. This mutual understanding ensures that both parties are aligned on what is expected, reducing the likelihood of misunderstandings that could lead to disputes or liability issues.

When both parties consent to the terms of the agency, they establish a foundation for cooperation and effective functioning. Without this consent, the agent may overstep their bounds or the principal might not recognize the actions taken by the agent as valid, leading to potential conflicts and legal complications. Hence, consent facilitates not only the framework of the relationship but also the flow of actions and decisions, providing a clear structure in which the agent operates under the authority of the principal.