Final answer:
An agent is empowered to represent a principal; their relationship is known as an agency, and the agent has the role of a fiduciary.
Step-by-step explanation:
An agent is a person who is empowered by contract to represent the interest of someone called a principal. The relationship between the two is called an agency, and the agent is called a fiduciary. This is a foundational concept within the business world, where agency relationships can range from a salesperson representing a company, to a lawyer representing a client, to a literary agent representing an author.
Within the context of business law and contracts, the agency relationship is crucial because it allows one party (the agent) to act on behalf of another party (the principal) and to create binding obligations. It is fundamental to understand that the agent's actions within the scope of their authority are treated as if the principal themselves had taken those actions, which entails significant trust and responsibility.
From a broader perspective, the concept of agency is also significant in various fields like anthropology and political science, helping to understand social contracts and political socialization.