Final answer:
An agency created by the actions of the parties, rather than an explicit agreement, is known as an implied agency. It is inferred from behavior, circumstances, or both, suggesting an individual has authorization to represent another's interests.
Step-by-step explanation:
An agency that exists as a result of the actions of the parties is known as implied agency. This contrasts with an express agency, which is formed by explicit written or spoken agreement between principal and agent.
Implied agency arises when the actions or circumstances indicate that an individual has been authorized to act on another's behalf, despite the absence of an explicitly stated agreement. Examples include the relationship between a shop owner and a worker where the worker's role suggests authority to sell goods, or a legal scenario where someone represents another's interests without formal declaration.
This form of agency is inferred from the behavior or situation rather than being formally declared, and it often comes into play when third parties form reasonable beliefs that someone has the authority to act based on their conduct or the context.