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Creation of Agency

Agency is a relationship between a principal and an agent in which the principal confers his or her rights on the agent to act on principal’s behalf.  Such a relationship is based on an agency contract.  The rights and duties of the agent and principal are in accordance with the express or implied terms of the contract.

To create an agency, the consent of the agent and the principal is necessary.  The principal must intend that the agent act for him or her, the agent must intend to accept the authority and act on it.  The intention of the agent and the principal must be either in express terms of the contract or can be inferred from the conduct of the parties.  In the absence of any claim or exercise of control by one party over the activities of another, there can be no agency relationship[i]. 

An agency relationship can arise only at the will and by the act of the principal. Existence of agency is always a fact to be proved by tracing it to some act of the alleged principal. There are two species of agency: actual, either express or implied, and apparent.  The relationship of an agent and an principal may also arise by estoppel, necessity or operation of law.

In transactions conducted by parties through an intermediary, whether an agency relation has been created depends on the intention of the parties.  In such cases, terms used to designate the capacity of the intermediary in the written instrument attending the transaction is not conclusive.  Factors to be considered in determining if there is an agency and which party is the principal of the intermediary include the duties of the intermediary, the exercise of such duties, and the person for whose benefit they are being performed.

[i] Carr v. Hunt, 651 S.W.2d 875 (Tex. App. Dallas 1983)

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