Final answer:
A subagency relationship occurs when an agent is authorized by a primary agent to carry out tasks on their behalf. The subagent acts as a representative of the primary agent and can bind them in legal obligations.
Step-by-step explanation:
A subagency relationship typically occurs in situations where an agent is given authority by a primary agent to carry out certain tasks on their behalf. In this relationship, the agent, who is known as the subagent, acts as a representative of the primary agent and can bind the primary agent in legal obligations with third parties.
For example, in the real estate industry, a subagency relationship may arise when a listing agent, who represents the seller, allows another agent, known as the subagent, to assist in marketing and showing the property to potential buyers. The subagent, though working with the buyer, still owes fiduciary duties to the seller.
Another example is when an attorney hires another attorney to handle a specific case on their behalf. The subagent becomes responsible for representing the client under the supervision of the primary attorney.