Agency defined: principal, agent, third party, general and special agents

Agency: who represents whom?

Agency is a relationship in which an agent represents a principal in dealings with third parties. The principal is the person represented; the agent acts on that person's behalf within authorized limits. A third party is someone outside that particular agency relationship. These roles depend on the relationship being examined, not simply on who pays a fee.

Suppose Elena lists her home with Broker Lee, and buyer Marco makes an offer through a separate broker. In Elena's agency relationship, Elena is the principal, Lee is her agent, and Marco is a third party. In Marco's separate relationship, Marco is the principal and his own broker is his agent. A person can therefore be a principal in one relationship and a third party in another.

Scope of authority

A special agent has authority for a particular transaction or specific undertaking. A broker engaged to find a buyer for a particular property is a common example. Marketing, showing, and negotiating can all belong to that one undertaking. The number of tasks does not turn special agency into general agency. An ordinary listing does not itself authorize the broker to sign the seller's acceptance of a purchase offer.

A general agent has authority to handle a series of transactions within a particular business or continuing activity. A property manager authorized to collect rent, arrange repairs, and negotiate leases for an owner's rental operation is a common example. General authority is still bounded: managing rentals does not by itself authorize selling the building or handling the owner's unrelated affairs. Read the actual authorization; the label alone does not establish every permitted act.

California's brokerage relationships

Under California Civil Code section 2079.13, the broker bears responsibility for salespersons and broker associates acting for that broker. A salesperson's duty to a principal or a buyer or seller who is not a principal is equivalent to the responsible broker's duty to that party.

California's agency disclosure law distinguishes representation from compensation. A buyer's agent can represent the buyer even when the seller pays some or all of the compensation. A seller's agent owes fiduciary duties to the seller, while also owing the buyer duties including honest and fair dealing. A third party is not a person to whom no duties are owed. California permits dual agency with both parties' knowledge and consent.

Keep two questions separate: Whom does the agent represent? identifies seller, buyer, or dual agency. How broad is the authorized undertaking? distinguishes special from general agency.