Answer
In an agency relationship, one party acts as the agent while the other assumes position of principle. The agent provides and performs services on behalf of the principal, with the principal's full knowledge and authorization. The agency and principle engage in a binding partnership, benefiting from each other's engagement in the relationship. Agency relationships function as fiduciary partnerships, giving the agency responsibility for acting in manners benefiting the principal.
In Corporations, important agency relationships exist between
- Managers and Stockholders
- Senior Management and Junior management
- Stockholders and Creditor(debt holders)
- Stockholders and other parties