In an agency relationship, the legal relationship is created primarily between which parties?

Prepare for the ATT Law Exam. Practice with multiple choice questions, each providing hints and explanations. Be well-prepared for exam day!

The central idea is that when an agent acts within their authority, the binding legal relationship created by the agency is with the third party the agent is dealing with. The agent is authorized to act for the principal, so the contracts and obligations that come from those dealings bind the principal directly to the third party, even though the agent facilitates the transaction. The agency itself is established by a contract between principal and agent, but the enforceable arrangement that the third party relies on and that gives rise to rights and duties in practice is the principal–third party relationship created through the agent’s acts.