Is Consensus the only True Basis of Agency?

Abstract

While it is germane to define Agency as the relationship that arises when one person, referred to as the Principal secures another, the agent, to carry out one or more activities on his behalf, this definition might not adequately identify the foundation of the existence of the relationship between the Principal and his agent. For one, adopting the above definition, hook, line and sinker would create in the mind of the reader the doubtful assumption that agency is always manifestly contractual, arising as most writers would say from consensus between the Principal and the Agent.

It is pertinent to note here however, that in today's commercial world, the existence of Agency relationship is almost inexorably tied to contract. This is necessitated by the need to achieve expediency in one's commercial life. The classic incidences of agency arise more from seeking a person or a group of persons to carry out some form of activity owing to the inability of the person originally foist with that responsibility or need to carry them out. Such inability may either be as a result of lack of technical know-how or expertise. The need then arises for an expert to be contracted to assist in such matters to avoid want on consequences.

These instances have led some learned writers and commentators, and even scholars to assert, more often without exceptions that agency is synonymous with contract. For instance, Reitzel et al in their well respected book: Contemporary Business Law define agency as the relationship "exists when two persons or entities agree that one — the Agent will perform work or services for and under the direction or control of the other — the Principal............" No doubt this is the consensual theory of agency relationships.