Understanding Agency Relationships

The video tutorial explains the concept of agency, where one party (the agent) acts on behalf of another (the principal) based on authorization. It details the roles of the principal and agent, emphasizing that the agent represents the principal in dealings with third parties. The principal is responsible for the agent's actions within the scope of their authority, and is liable to third parties for these actions.

What is the primary function of an agent in a principal-agent relationship?

• To act independently of the principal

• To act on behalf of the principal

• To supervise the principal

• To replace the principal

Who is responsible for authorizing the agent to act?

• The third party

• The principal

• The agent themselves

• A legal advisor

In a principal-agent relationship, who is considered the principal?

• The person who acts on behalf of another

• The person who authorizes another to act

• The third party involved

• The legal advisor

What is a key characteristic of the agent's role?

• The agent acts independently

• The agent can override the principal's decisions

• The agent stands in the shoes of the principal

• The agent is liable for all actions

Who is liable for the actions of the agent within the scope of their authority?

• The legal advisor

• The agent

• The third party

• The principal