The foundation of an organization, institution, or department with a specified goal or function is referred to as creating an agency. Agencies can be governmental or non-governmental, and they play an important role in addressing specific concerns, providing services, and implementing policies in a variety of industries. There are various methods for establishing agencies, each with its own set of benefits and qualities. Here are some popular ways of establishing agencies:

1.Agency through clear agreement

"Agency by express agreement" refers to a legal relationship in which one person (the principal) gives another person (the agent) authorization to act on their behalf in certain subjects. This agency connection is established by a written agreement between the principal and the agent.

In this sense, "express agreement" means that both parties clearly state and agree on the terms and circumstances of the agency relationship, either orally or in writing. The agreement may define the agent's scope of power, the precise tasks they are authorized to execute, and any constraints on their actions.

A person (the principle) may, for example, engage a real estate agent (the agent) to sell their property. The principal and agent would sign an express agreement outlining the agent's rights to market the property, negotiate with potential buyers, and handle the sale paperwork.

The concept of "agency by express agreement" is critical in legal situations because it establishes a clear understanding of the relationship between the principal and the agent and aids in the prevention of future misunderstandings or disputes. It also aids in the protection of both parties' rights and interests.

2.Implied authority provides agency.

Agency by implied authority, also known as agency by estoppel or agency by apparent authority, is a legal concept that occurs when a principal (the person or entity) gives the appearance of authority to an agent (another person) to act on their behalf despite the absence of a formal agreement or explicit authority. This sort of agency is founded on the estoppel principle, which prohibits the principal from denying the existence of the agent's authority if the principal's acts or comments caused a reasonable third party to assume that the agent had authority to act on the principal's behalf.

Here's an example of implied authority demonstrating agency:

Assume that Company A's CEO, John, has not formally delegated power to Mary, a mid-level manager, to negotiate contracts on the company's behalf. However, John frequently allows Mary to participate in contract conversations and gives her access to contract-related firm information. Bob, a potential client, visits with Mary one day to discuss a contract. Bob enters into a contract with Mary, believing that Mary has the right to negotiate on behalf of Company A due to her consistent involvement in such things.

Agency through inferred authority may apply in this case. Despite the fact that Mary did not have formal authority, John's actions and behavior implied that Mary had the right to negotiate contracts. As a result, Company A may be bound by the contract with Bob, and John cannot later dispute Mary's power if Bob acted in good faith and was unaware of Mary's lack of actual authority.

It is crucial to highlight that agency by implied authority can have legal consequences and necessitates careful assessment of the facts and circumstances of the specific situation. Parties involved in such situations should seek legal counsel to better understand their rights and responsibilities.