An agency by implied agreement is a legal concept that arises when two parties engage in conduct that suggests an agency relationship exists, even if there has been no formal agreement or contract. In other words, an agency by implied agreement occurs when one party acts on behalf of another, and the actions of the parties give the impression that they intended to create an agency relationship.
To better understand this concept, let us consider an example of an agency by implied agreement.
Imagine that a small business owner, John, needs to purchase supplies for his store. John is busy and cannot make the trip to the supplier himself. He contacts his friend, Mike, and asks if he can pick up the supplies for him. Mike agrees, and John gives him a list of the items he needs.
Mike visits the supplier and purchases the supplies on John’s behalf, using John’s credit card to pay for them. He then delivers the supplies to John’s store and receives payment from John for the cost of the supplies.
In this scenario, Mike acted as an agent for John. Although there was no formal agreement or contract, the actions of both parties created an agency by implied agreement. John trusted Mike to act on his behalf, and Mike performed actions that suggested he was acting on John’s behalf.
The agency by implied agreement in this scenario created certain legal obligations and responsibilities for both parties. John was responsible for paying for the supplies, and Mike was responsible for ensuring that the items purchased were of the quality and quantity specified by John.
This example demonstrates how an agency by implied agreement can arise in everyday situations, and why it is important to understand the legal implications of such a relationship. If you are unsure whether an agency relationship exists, it is always best to seek professional legal advice.
In conclusion, an agency by implied agreement is a concept that arises when two parties engage in conduct that suggests an agency relationship exists, even if there has been no formal agreement or contract. This legal concept can have significant implications, and it is important to understand the nature of such relationships to protect yourself and your business.