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Principal Agent Relationship Essay

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Within a federal republic, such as the United States, we tend to rely on representatives to represent us as a nation rather than us representing the nation. This is due to people’s capacity of knowledge as not everyone can be the best of themselves in every area. Eventually, leading to representatives, who have the knowledge in politics and government, in representing the people of every state. This type of situation is when the people, who are the principals, gives authority to the representative, who are the agents, to represent them. By definition, the principals are those who possess authority and agents are individuals who execute the authority on behalf of the principals (Kernell 29). Although this is common, not many individuals are aware that they are entering a principal and agent relationship. In the United …show more content…

Though it is not necessary for it to just involve politics, it can relate to legal matters, personal matters, or work related relationships. One example of a principal and agent relationship is a lawyer and its client. In this relationship, the principal is the client and the agent is the lawyer. This is a principal and agent relationship because the client is delegating its authority to the lawyer. The lawyer ends up being the agent who has received authority from the principal to handle the issue that the principal is requesting. The client gives authority to the lawyer because the client does not have the necessary knowledge to handle a matter that requires additional knowledge. The lawyer will be the representative of the client who has no background in legal cases. It will allow the client a higher chance of winning the case or having a better perspective on the matters that they are concerned about. Since the relationship involves a lawyer and client, this example will revolve around the law and legal issues, such as divorce, personal injury claim, or financial

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