Final answer:
An agency relationship is defined by the substantive contact between the agency and its principals, where regular interaction and communication serve as the foundation for a strong relationship.
Step-by-step explanation:
An agency relationship is often determined by the contact and interactions between the agency and its stakeholders or principals. The heart of this relationship lies in the idea of proximity and regular conversation, which parallels the way personal relationships form due to frequent contact. In the business context, this contact doesn't necessarily have to be physical; it can involve regular updates, meetings, and shared goals that build a substantive and working bond between the parties involved.
The requirements for an agency relationship include the need for ongoing interaction, not just occasional touchpoints. It's the quality and frequency of these interactions—whether they are discussions about performance, objectives, or improvements—that define the relationship's strength and effectiveness. For example, effective federal property management or recognition of interstate laws under the 'Full Faith and Credit' clause signifies how systemic regular interaction is critical in forming stable and recognized agency relationships, as seen in the context of legal debates such as Obergefell v. Hodges.