Agency Relationships and Third-Party Liability

Definition: An agency relationship is established when one party, the agent, acts on behalf of another party, the principal, in dealings with third parties.
Key Elements:
- Principal: The party on whose behalf the agent acts.
- Agent: The party authorized to act for the principal.
- Third Party: The external party dealing with the agent.
Scope of Authority (🎯):
- Definition: This defines the specific actions an agent is legally permitted to perform on behalf of the principal.
- Example Assignment: Purchase a specific car for 30,000.
  - Authorized (✅): Buying that exact car at or below 30,000.
  - Unauthorized (❌): Buying a different car or paying more than 30,000.