What term describes the relationship that exists when one party acts on behalf of another?

The term "Agency" specifically refers to the relationship where one party, known as the agent, is authorized to act on behalf of another party, known as the principal. This legal relationship is foundational in various fields, including real estate and law, as it establishes a framework for the agent to carry out tasks such as negotiating contracts or making decisions that bind the principal.

In this context, the agent has a fiduciary duty to act in the best interests of the principal, and the principal is responsible for the actions taken by the agent within the scope of that authority. Understanding the concept of agency is crucial for title agents and other professionals who often represent clients in transactions, ensuring clarity of roles and responsibilities.

While other terms like partnership, trust, and corporation describe different types of legal relationships and structures, they do not specifically denote the action of one party representing another in the way that agency does. A partnership involves two or more parties collaborating as co-owners of a business, a trust involves one party holding title to property for the benefit of another, and a corporation is a legal entity that is separate from its owners. Each of these has distinct legal implications and responsibilities that differ from those of an agency relationship.