What type of relationship is defined by one person or entity representing another in business?

The agency relationship is characterized by one person or entity (the agent) acting on behalf of another (the principal) in business dealings. This relationship is foundational in many business contexts, where the agent has the authority to perform certain actions or make decisions that legally bind the principal. It is essential in fields like interior design, where designers often negotiate contracts, handle procurement, or represent clients in various capacities.

The distinction of the agency relationship lies in the fiduciary duty the agent has to the principal, meaning the agent must act in the best interests of the principal and disclose any conflicts of interest. This relationship is instrumental in creating trust and legal responsibility in business transactions, ensuring that the interests of both parties are properly represented and protected.

In contrast, an employment relationship typically denotes a worker-employer dynamic where one party is hired to perform services for the other but does not inherently carry the same level of representation and authority in business negotiations. A partnership involves two or more parties collaborating as business partners, sharing profits and responsibilities, while an establishment relationship does not formally refer to a recognized type of relationship in business. Therefore, the agency relationship stands out as the correct definition for a scenario where one entity represents another.