Agent: Definition, Types, Duties, and Examples

Key takeaways

• An agent is authorized to act on behalf of another person or entity (the principal).
• Agents may have broad or limited authority: universal, general, or special.
• Agents owe duties of loyalty, care, obedience, disclosure, confidentiality, and separation.
• Agents can be liable for breaches of duty, unauthorized acts, or undisclosed principal relationships.
• Agency by necessity allows a third party to act in urgent situations when the principal is unavailable.

Definition

An agent is a person or entity legally authorized to act for a principal. The agent can make decisions or enter transactions on the principal’s behalf, often in areas where the principal lacks time, expertise, or presence. Common examples include attorneys, brokers, real estate agents, talent agents, and corporate representatives.

Types of agents

• Universal agent: Has broad authority to act for the principal in nearly all matters (often via power of attorney).
• General agent: Authorized to conduct a range of transactions within a specific, ongoing sphere (for example, a manager or a business representative).
• Special (or limited) agent: Authorized to perform a specific transaction or limited series of transactions (for example, a real estate agent for a particular sale).

Note: Many industries require licensing or registration to act as an agent; practicing without proper credentials can lead to penalties.

How agents are used

Individuals and businesses hire agents to:
* Negotiate contracts and sales (real estate, entertainment, sports).
* Make investment decisions (stockbrokers, financial advisors).
* Represent legal interests (attorneys).
* Handle business operations or emergency decisions when principals are absent.

Agents are valued for industry knowledge, contacts, and the ability to act efficiently on behalf of the principal.

Duties of an agent

Agents owe several core obligations to their principals. These duties are both ethical and legal.

Duties of loyalty and integrity

• Avoid improper personal benefits beyond agreed compensation.
• Do not usurp opportunities that belong to the principal or take conflicting positions without consent.
• Do not compete with the principal in ways that exploit confidential knowledge.
• Disclose any other principal relationships or potential conflicts of interest.
• Protect confidential information and avoid using it for personal gain.

Performance and care responsibilities

• Honor the terms of any contract with the principal.
• Exercise reasonable care and competence—act as the principal would expect under local standards.
• Follow lawful and reasonable instructions from the principal (duty of obedience).
• Promptly disclose material information that could affect the principal’s decisions.
• Keep the principal’s funds, assets, and records separate from the agent’s own (duty of separation).

Acting with care, transparency, and within authority typically reduces the agent’s exposure to liability.

Agent liability

An agent may be liable to the principal or third parties for:
* Exceeding granted authority.
Breaching duties (loyalty, care, confidentiality, disclosure).
Negligent or reckless conduct.
* Failing to disclose they are acting as an agent when required, which can create unintended principal-principal or principal-liability relationships.
Agents who sign contracts in their own name or expressly assume personal obligations can incur personal liability.

Agency by necessity

Agency by necessity applies when the principal is unavailable and an urgent decision or action is required to protect the principal’s interests. Conditions typically include:
* An immediate need or emergency.
Impossibility of contacting the principal in time.
Actions taken are reasonable and in the principal’s best interest.
Courts may later approve such acts if they were appropriate and necessary under the circumstances. This doctrine is often relevant in business emergencies and certain estate or health-care situations.

FAQs

What is the job of an agent?
* To represent the principal’s interests by performing tasks, making decisions, or negotiating transactions the principal cannot perform.

What is the role of an agent?
* To act loyally, competently, and within the scope of authority, always prioritizing the principal’s best interests.

Who can be an agent in business?
* Lawyers, managers, brokers, officers, or any designated representative authorized to act for the company or owner.

Conclusion

An agent serves as a trusted representative who acts on behalf of a principal. Understanding the types of agency, the duties imposed on agents, and the limits of their authority helps principals choose and supervise agents effectively and helps agents minimize legal risk while fulfilling their responsibilities.