What Is an Agent? Definition, Types of Agents, and Examples

Understanding agents

An agent is a person granted permission, either explicitly or assumed, to perform tasks on behalf of another individual. This authorization covers a range of activities, such as making decisions, negotiating deals, and managing various responsibilities.

Types of agents

Agents come in different types, each with specific roles:

• Universal agents: These agents possess a broad mandate to represent clients. They might hold a power of attorney, which gives them considerable authority in legal proceedings and financial transactions.
• General agents: Hired to handle specific transactions or proceedings over a set period, general agents have broad yet limited authority. For instance, a talent agent guiding an actor’s career falls into this category.
• Special agents: Authorized for specific transactions within a defined timeframe, special agents include real estate, securities, insurance, and travel agents.

Why agents are essential

Agents are valuable for their expertise, saving time and ensuring tasks are performed competently. Whether negotiating contracts, navigating complex industries, or managing intricate deals, agents bridge the gap between clients and specialized fields.

Loyalty responsibilities of agents

An agent’s loyalty involves several duties:

• Duty of avoiding material benefit: Agents must refrain from unfairly benefiting from their position, ensuring impartial representation.
• Duty not to usurp: Agents must avoid capitalizing on opportunities meant for their principal, safeguarding the principal’s interests.
• Duty to not compete: Agents should not engage in transactions that conflict with their principal’s interests, avoiding any potential conflicts of interest.
• Duty of transparency: Agents must disclose if they represent other parties, ensuring fairness and transparency in their dealings.
• Duty to protect information: Agents are obligated to keep sensitive information confidential, refraining from using it for personal gain.

Performance responsibilities of agents

An agent’s performance entails various obligations:

• Duty of contract: Agents’ actions align with written agreements, and they fulfill specific terms or responsibilities mentioned in these agreements.
• Duty of care: Agents must act competently and reasonably, ensuring the best interests of their clients are upheld.
• Duty of obedience: Agents follow reasonable instructions unless they are legally or ethically restricted from doing so.
• Duty of disclosure: Agents promptly and accurately share important information with their clients.
• Duty of separation: Agents maintain a clear distinction between their own affairs and those of their clients, ensuring transparency and integrity.

Agent liability

Agents can be held accountable if they breach their duties, act beyond their authority, or engage in misconduct. They are responsible for any losses resulting from their actions. For example, if a real estate agent fails to provide accurate information about a property, and the buyer suffers financial loss as a result, the agent might be held responsible for the damages.

Agency by necessity

Imagine a situation where someone can’t make decisions because they’re unable to, either due to a physical problem or a mental challenge. In such cases, a special rule called “agency by necessity” can come into play.

Here’s how it works: Let’s say a person is in an accident and can’t communicate or make decisions. Someone else might need to step in and make choices on their behalf. This could be as simple as a medical decision or something more complicated, like handling financial matters.

During emergencies or urgent situations, when the person who needs to make decisions can’t do so, another person can act as their “agent.” This means that the agent can make decisions that are in the best interest of the person who can’t decide for themselves.

For example, if a parent is hurt and can’t take care of their child, another family member might step in to make sure the child is safe and cared for. This is an example of agency by necessity.

This principle helps ensure that when important decisions need to be made, and the person involved can’t make them, someone else can step in and make the right choices on their behalf, especially in times of urgency.