What is an Agency Relationship
Subject: Organizational Behavior | Topics: ,

The separation between owners and managers creates an agency relationship. An agency relationship exists when one or more persons (the principal or principals) hire another person or persons (the agent or agent) as decision making specialists to perform a service. Thus, an agency relationship exists when one party delegates decisions-making responsibility to a second party for compensation.

To determine whether a tort was within the scope of agency or employment, courts look at the following:

(1) Whether the act was authorized;

(2) Whether the act was authorized;

(3)  Whether the act was one commonly performed by employees on behalf of their employers;

(4)   Whether the employer’s interest was advanced;

(5)   Whether the employer furnished the means or instrumentality by which the injury was inflicted;

(7)   Whether the employer had reason to know

What is an Agency Relationship

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