In the context of agency, who is referred to as the principal?

In the context of agency, the principal is defined as the client who engages the services of an agent to act on their behalf. The principal essentially authorizes the agent to represent them in various activities, such as negotiating contracts or engaging in real estate transactions. The relationship between the agent and the principal is foundational in real estate, as it establishes the duties and expectations of both parties.

In this scenario, the principal has the right to expect that the agent will act in their best interest and adhere to the terms of the agreement they have established. The agent, on their part, must exercise loyalty, communicate effectively, and fulfill any obligations that are part of the agency relationship. Understanding this dynamic is critical for anyone studying real estate practices, as it reinforces the responsibilities agents have towards their clients and highlights the importance of fiduciary duties in the industry.