What is an agent?
An agent, in legal terminology, is a person who has been legally empowered to act on behalf of another person or entity. An agent may be employed to represent a client in negotiations and other transactions with third parties. The agent may be invested with decision-making power.
An agent may be authorized to represent a client in negotiations and other transactions with third parties or may have decision-making power. make investment decisions for them.
Key points to remember
- An agent is authorized to act on behalf of another person.
- People hire agents to perform tasks that they lack the time or expertise to do.
- A universal agent has broad authority to act on behalf of another, but a general or special agent has more limited and specific powers.
The person represented by the agent in these scenarios is called the principal. In finance, this is a fiduciary relationship, in which an agent is authorized to transact on behalf of the client.
Types of agents
Legally, there are three classes of agents:
- Universal agents have a broad mandate to act on behalf of their clients. Often, these agents have received a power of attorney for a client, which gives them considerable power to represent a client in legal proceedings. They may also be authorized to carry out financial transactions on behalf of their customers.
- General agents are mandated to represent their clients in specific types of transactions or procedures over a given period. They have a broad power to act but in a limited sphere. A talent agent for an actor would fall into this category.
- Special agents are authorized to carry out a single transaction or a series of transactions within a limited time. It is the type of agent that most people use from time to time. A real estate agent, a securities agent, an insurance agent and a travel agent are all special agents.
People hire agents to perform tasks that they lack the time or expertise to do themselves. Investors hire stock brokers to act as intermediaries between themselves and the stock market. Athletes and actors hire agents to negotiate contracts on their behalf, as agents are generally more familiar with industry standards and have a better idea of how to position their clients. Most often, potential owners use agents as intermediaries, drawing on the professional’s increased skills when negotiating.
Companies often hire agents to represent them in a particular business or negotiation, drawing on the superior skills, contacts or general information of the agents to conclude the transactions.
There is also the agency of necessity, in which an agent is appointed to act on behalf of a client physically or mentally incapable of making a decision. It is not always a case of incapacity. Business owners, for example, can designate agents to handle unexpected problems that occur in their absence.