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Who is considered a principal in an agency relationship?
� Principal: The person or entity on whose behalf and subject to whose control an agent acts. �� For example, your boss at work. � Agent: A person who agrees to act on behalf of and instead of his or her principal, subject to the principal's control. A good example would be an insurance agent.
What does principal relationship mean?
In the agent-principal relationship, a principal is defined as an entity or person who employs another person, usually known as an agent, to work or perform an operation on their behalf. In other terms, the principal is the individual who receives services such as representation or for whom such an act is done.
What does principals only mean in real estate?
In a fiduciary relationship, the person who hires a real estate broker to represent him or her in the sale of property. The phrase "principals only", often found in real estate ads, is meant to exclude real estate agents from contacting the owners of the property.
Which of the following correctly defines a principal-agent relationship?
The principal-agent relationship refers to an arrangement in which one entity legally appoints another to act on its behalf. Agency cost of debt is a problem arising from the conflict of interest created between shareholders and debtholders.
What is an example of a principal-agent relationship?
 For example, assume that Principal employs Agent to manage his business. Principal tells Agent he can't buy more than $500 worth of goods from any supplier. Principal tells or implies to a vendor, however, that Agent has unlimited authority to buy from him. Agent buys $1,000 worth of goods from the vendor.