Developing an Agent Relationship: Written, Oral & Implied Contracts

If you are establishing an agreement with another individual, for the person of gaining expertise, services or assistance, the person, or entity, may be considered your "agent". When developing this agent relationship, there is usually some form of contract that is either written or made verbally. In some cases, the relationship between you and your agent may be implied and a contract never exists. Before considering the relationship of business with another individual, be certain you agree as to how that relationship will be legitimized; using either contract or implied agreement.

Oral or written contracts are usually the recommended form of agent-forming relationships. Within that contract, either oral or written, there needs to be an individual who agrees to act as the principal and an individual who acts as the agent. In doing so, the principal is receiving the benefit for the services of the agent and the agent is deemed to represent the principal in the matters for which the relationship was formed. In some courts, the issues of legitimized contracts between a principal and agent are addressed by not only the terms of the responsibility and benefit, but also the degree to which the agent can manage and serve in a financial capacity. If you are considering an agreement by which finances, monetary transfers or assets are involved, a written agreement is necessary as this type of agreement should never be managed through an oral contract.

In addition to oral and written contracts, your relationship with an agent may also be implied. By examination of the facts of a case, a principal-to-agent relationship can be established simply by implied circumstances that warrant such a relationship. In most cases, the implied creation of an agent relationship is not a matter that is addressed early in the events of your relationship but, instead, is established when suit is filed and a court determines the facts of the case and makes the analysis to conclude an implied agent relationship existed.

When addressing implied agent relationships, the issues of apparent authority or actual authority also must be addressed by the court and can be challenging as these are distinct legal matters for a jury to address. To ensure optimal outcomes for your relationship with another individual, or entity, implied agency agreements should be avoided as much as possible.

In the realm of litigation there are many types of allegations and defenses that can be presented. While the issues of agent relationships may be developed at the onset of a case, by presentation of oral or written contract, the developments of facts in a case may reveal there is also an implied agency relationship. To ensure optimal outcomes when considering an agreement, be certain you understand the type of relationship and if an "agent" relationship is developed, confirm it through written contract and do not assume it is implied or require that it be made orally.