In agency law, who is the principal in a broker-principal relationship?

In agency law, who is the principal in a broker-principal relationship?

• A. The broker
• B. The person who hires the agent
• C. The customer
• D. The agent

Answer: (B)

In agency law, the principal is the party who authorizes the agent to act on the principal’s behalf. In a broker-principal relationship, that means the person who hires the broker to handle tasks and make decisions for them is the principal. The broker serves as the agent, carrying out duties and representing the principal’s interests under the scope of authority given (often through a contract like a listing or agency agreement). The customer is the party the broker interacts with in the transaction, but they aren’t the principal unless they hired the broker to act for them. The agent is the one who acts on behalf of the principal, not the principal themselves.

In agency law, the principal is the party who authorizes the agent to act on the principal’s behalf. In a broker-principal relationship, that means the person who hires the broker to handle tasks and make decisions for them is the principal. The broker serves as the agent, carrying out duties and representing the principal’s interests under the scope of authority given (often through a contract like a listing or agency agreement). The customer is the party the broker interacts with in the transaction, but they aren’t the principal unless they hired the broker to act for them. The agent is the one who acts on behalf of the principal, not the principal themselves.