Probably the most common topic tested within agency essays on the UBE is authority. A topic that overlaps quite a bit with authority is the method by which an agency relationship is established.
There are a number of ways to create an agency relationship. The first is the most straight-forward: parties (the principal and agent) may expressly create an agency agreement. And even if there isn't an express agreement between the parties, the law might treat the relationship as an agency relationship if the principal holds out the agent as someone acting for the principal. This idea of an implied agreement in this context is similar to the idea of apparent authority discussed elsewhere in this subject.
Even if there is no express or implied agreement, equity might treat the relationship as an agency relationship. An agency relationship may be created through estoppel when a third party relies to his/her detriment on the agency relationship and the principal acted in a way to induce that reliance. Once again, this is not much different from apparent authority.
Lastly, an agency relationship might be created by statute. These statutes are generally designed to accomplish a limited purpose. You'll probably recall some instances in Civil Procedure in which a statute will designate one person as an agent for another to receive service of process. That's what this is all about, and in these situations, the agent is said to have inherent authority.
It's worth noting a few other things: consent by both agent and principal is required to form an agency relationship. Generally, a writing is not required but the Statute of Frauds should always be considered. For example, if the agent is designated to enter with a third party into a contract that will fall under the Statute of Frauds, then the underlying agreement between agent and principal should likewise be in writing. As for consideration, none is required to enter into this type of agreement between agent and principal.
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