Agent Definition

Agent Meaning: What is an agent?

In business terms, an agent is a person who’s appointed by a business to act on its behalf for a specified purpose. For example, a small business owner can authorize an agent through an oral or written agreement, express or implied. Because agency relationships are contract-based, entrepreneurs can choose how to grant or limit their agent’s authority. In practice, the business benefits of using an agent vary depending on what the business asks the agent to do.

Corporate Agent

Although a corporation is a distinct legal entity, it needs people to sign documents on its behalf. Only those with authorization to sign can legally bind the company with signed documents. As such, a corporate director often meets the definition of an agent of the corporation; they’re typically authorized to sign documents for it. The corporation can always grant signing authority to others if needed.

General Agent

Small businesses often hire a general agent to track leads and make sales. A general agent has broad legal authority to bind the business to new agreements. In these relationships, the agent owes a fiduciary duty to act in the best interest of the person who hired them, called the “principal.” A common example of this would be a manufacturing agent who completes sales in another country or region.

Special Agent

A special agent has the authority to act in a limited capacity for a particular purpose or task. A well-known kind of special agent is a registered agent. Every business needs to have a registered agent on file with the state. When appointing a registered agent, the business grants them the limited authority to accept service of process on its behalf. 

Servant (Employee)

Historically, employees were considered “servants” of the “master.” In modern situations where the employer controls the employee’s work, these concepts continue to exist, even though the nomenclature is obsolete. When an employee works for an employer, they are considered the employer’s agent for liability purposes. 

Agent Examples

Some common agent examples include:

• Registered agent
• Sales agent
• Manufacturing agent
• Distributor
• Licensing agent
• Artists’ agent
• Real estate agent

A business owner creates an agency anytime they authorize someone to take an action that incurs a cost on their behalf. Ultimately, business owners have legal responsibility for what their agents do.

Recommended Articles:

Do I need a Registered Agent?

Changing a Registered Agent for an LLC

Considerations Before Hiring an Agent

One of the most significant disadvantages of agents is that broad grants of authority can have serious consequences for a business. Although it’s possible for businesses to create an agency relationship through an oral agreement, it’s advisable to have a written agency agreement. Many companies have fought legal battles over whether an agent had the legal authority to bind the business to an agreement. It’s prudent for business owners to avoid that trouble completely by creating and reviewing an agency agreement with a professional before signing.

ZenBusiness Can Help

This guide covered the essentials of what an agent is and different types of agents, including a corporate agent, general agent, special agent, and employees. When a business appoints an agent, the agent has the authority to make business decisions according to the business’s terms. If a business owner needs someone to help because they cannot be there to run their business, they might benefit from having an agent. 

Starting a business with ZenBusiness helps business owners, acting as an agent on their behalf when navigating the business start-up process. Their business experts can offer guidance on all stages of business ownership, from liability and taxes to closing a business.