Final answer:
An agent represents the principal, acting on the entity's behalf in contractual agreements with third parties. Understanding the role of agents and principals is important in the business world.
Step-by-step explanation:
An agent represents the principal, acting on the entity's behalf in contractual agreements with third parties. The principal is the person or entity that authorizes the agent to act on their behalf. Agents can be individuals, such as actors or athletes, or organizations, such as talent agencies or sports agencies.
For example, in the entertainment industry, actors hire talent agents to represent them in negotiations with casting directors and producers. The agents pitch the actor to potential employers, handle contract negotiations, and advocate for the actor's best interests.
Understanding the role of agents and principals is important in the business world, as it involves the delegation of authority and the establishment of legal relationships between parties.