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Generally speaking, a relationship known as agency arises whenever a person called "the agent" has express or implied authority to act on behalf of another called "the principal" and consents so to act. The primary sense in which the word agency is used is when a person is appointed to create a binding contractual relationship between the principal and a third party. If in the exercise of his express or implied power given by the principal, an agent enters into a contract with a third party and expressly states that he is acting for and on behalf of a principal, the agent will then create a binding contract between the principal and that third party. The word agency may also be used to describe the situation where a person is appointed by another to do acts on his behalf. In Hong Kong, estate agents are rarely authorised to enter into contracts on behalf of their clients.
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Agent compared with employee |
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An employee is subject to the direct control and supervision of his employer and has to obey the lawful and reasonable order and instruction of his employer in respect of matters falling within his scope of employment. An employee is often the agent of his employer for certain purposes, but not all agents are employees of their principals. |
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2. |
Agent compared with independent contractor |
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Unlike an agent, an independent contractor does not normally have authority to enter into a binding contract on behalf of his employer with a third party. |
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3. |
Agent compared with attorney |
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An attorney is a special form of agent appointed by a principal by deed (known as "power of attorney") to create a legally binding contract on behalf of the principal with a third party or to do any other acts on behalf of the principal. Only a duly appointed attorney by deed can execute a deed on behalf of his principal. |
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4. |
Agent compared with broker |
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A broker is a mercantile agent who is appointed to make contracts for the purchase and sale of goods, but is usually not entrusted with possession of the goods. His remuneration consists of commission (brokerage) and a broker generally contracts in the name of his principal. |
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