Agents are employed to represent their client in negotiations or dealings with third parties.

Types of Agents

Two common types of agents are attorneys, who represent their clients legally, and stockbrokers, who are hired by investors to make investment decisions relating to the stock market. The person represented by the agent in these scenarios is called the principal. In finance, it refers to a fiduciary relationship, in which an agent is authorized to perform transactions on behalf of their client. Legally, there are three broad classes of agents:

  • Universal agents: universal agents have a broad mandate to act on behalf of their client. Often these agents have been given power of attorney for their client, which provides them with considerable representative power in their client’s legal proceedings. Sometimes these kinds of agents are also authorized to make financial transactions on behalf of their clients.
  • General agents: agents who are contracted to represent their client for specific types of transactions or proceedings over an agreed-upon period.
  • Special agents: authorized to make a single transaction or series of transactions over a short time period.