Agency agreement is not a legally binding one. Is this statement true or false?

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justaguide eNotes educator| Certified Educator

The statement "Agency agreement is not a legally binding one." is false.

Agency agreements are created when a person wants to give authority to another party to take actions on her/his behalf. The person giving authority is called the principal and the person to whom the authority is given is called the agent.

Once the agreement has been created, the agent has the right to act on behalf of the principal and sign legal documents which would be treated like they have been signed by the principal personally. The principal has complete responsibility to ensure that they are honored.

The agency agreement has to be created after a lot of thought and due process by the principal as a lot of power is vested with the agent through its creation