ABSTRACT
In promoting marketing and sales in various countries, the primary company (the principal) may not be able to do everything itself; it may therefore utilise the services of another. To seek the services of another becomes important particularly when the principal is not sufficiently familiar with the legal environment and/or marketing and sales infrastructure in a foreign market. This is the basis for the principalagency relationship, whereby an agent is authorised by the principal to perform certain agreed acts and the agent remains accountable to the principal in respect of those acts. The term ‘agency’ therefore stands for the legal relationship which is created between a person or company (the principal) and another person or company (the agent). This relationship is normally consolidated by means of an agreement. Depending upon the terms of the contract, the scope of the principalagency relationship varies. In the commercial world, the principalagency relationship is often established by referring to the conduct of both parties (principal and agent) but in order to avoid any legal problems in the future, it is advisable to establish such relationship by means of a contract. It must however be pointed out that it is virtually impossible to define ‘agency’ – the best means of determining the principal-agency relationship in a given situation would be by referring to the consequences of it and the steps that led to it. What is most important is to ensure that an agent does not usurp the powers of the principal, nor acts beyond his authority or mandate.
