The key feature of an agency relationship is thata company will allow another firm to take on its name, and act as an agent in doing business. one party passes the responsibility for making decisions to another party. the principal will always make decisions that are in the best interests of the agent. the decisions by the agent will always improve the position of the owners of a firm. the principal may not always make decisions that are in the best interests of the agent.
Question
The key feature of an agency relationship is thata company will allow another firm to take on its name, and act as an agent in doing business. one party passes the responsibility for making decisions to another party. the principal will always make decisions that are in the best interests of the agent. the decisions by the agent will always improve the position of the owners of a firm. the principal may not always make decisions that are in the best interests of the agent.
Solution
The key feature of an agency relationship is that one party passes the responsibility for making decisions to another party.
Here's the step-by-step explanation:
-
An agency relationship is a legal relationship where one party (the principal) appoints another party (the agent) to act on its behalf.
-
The agent is given the authority to make decisions and take actions that bind the principal. This could involve entering into contracts, making purchases, or handling money.
-
The principal, in turn, is legally bound by the actions and decisions made by the agent.
-
However, it's important to note that while the agent is expected to act in the best interest of the principal, this may not always be the case due to conflicts of interest. This is known as the agency problem.
-
Therefore, the key feature of an agency relationship is the passing of decision-making responsibility from the principal to the agent.
Similar Questions
In Agency theory, the following are true except:" The principal delegates decision-making authority to an agent. Both parties are utility maximisers. The agent always acts in the interest of the principal. The agent has a legal and fiduciary duty to act in the best intrests of the principal.
Agency is a(n) __________ relationship (a legally binding agreement) between a principal and an agent whereby the principal, expressly or implicitly, authorizes the agent to work on his or her behalf and with the power to bind the principal.FormalInformalUndefinedContract
In an agency by estoppel, the important factor is whether the principal acts to: Blank______.Multiple choice question.discourage the impression that an agency relationship exists between the partiescreate the impression that the agent has the authority to act on behalf of the principalcreate the impression that an incidental beneficiary will receive a direct contractual benefit via the agentarticulate that there is an express agency agreement
Which one of the following is not necessarily a characteristic of an agent–principal relationship?The agent's authority may be general, or it may be restricted in some way.The agent has a duty to fairly represent the principal and to act in the best interests of the principal.Any third party with whom the agent deals has the right to rely on the agent's authority and to hold the principal legally responsible for its dealings with the agent.The agent is an employee of the principal.
The agency problem arises because of the agents' self-interest and information asymmetry, with the agent having more information than the principal.
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.