Key Takeaways

  • Acting as an agent in a contract means representing another party and creating legal obligations on their behalf.
  • The phrase “are you an agent acting as an intermediary” refers to situations where the agent connects two parties without being the contracting party themselves.
  • Intermediaries typically introduce or facilitate, while commercial agents actively negotiate and conclude contracts for a principal.
  • Agents and intermediaries face different legal rights, duties, and liabilities. Disclosure, transparency, and authority are essential for both roles.
  • Understanding whether you are an intermediary or an agent is crucial for compliance with contract law and to avoid disputes.

When acting as an agent in a contract, it's important to understand you are being held responsible for managing an affair that's being transacted by others. Agents take on many different capacities. It all depends on the nature of their employment. An agent may be an attorney, a broker, a factor, a supercargo, and the like. Each of these examples comprises an agent.

An agent's authority is established by deed, in writing, by parol, by the act of their employment, from the capacity of the parties involved, or by the nature of the act. This makes an agent's appointment either express or implied.

What Is the Scope of an Agent's Authority?

An agent's authority may be general or specific. It may be contained to a single act or extend to every act in connection with their employment. This means an agent can either be bound by specific instructions or be left to use their own discretion.

An agent is duty-bound to the following actions:

  • To perform the action or actions undertaken.
  • To exercise the necessary care.
  • To render all accounts.

There may be a single agent or joint agents. Common law dictates that when several agents are involved and no authority has been given, all agents must come to an agreement when binding the principal.

This means that if the authority is given to three agents, two of them cannot execute it on their own. Decisions must be made by all or the one who was given authority.

However, if the authority is apparent, the principal can award power to others and an execution by two would be permitted. However, this rule only applies to private agencies. Public agencies allow the authority to be executed by a major.

Commercial transactions are different again. Typically, when there are numerous agents, each possesses whole power. For example, if you were dealing with the consignment of goods to two partners, each possesses whole power over the goods.

Acting as an Intermediary

When considering are you an agent acting as an intermediary, it is important to distinguish between an intermediary and a commercial agent. An intermediary’s role is generally limited to introducing two parties and facilitating their negotiations. Unlike an agent, they do not have authority to conclude contracts on behalf of a principal. For example, in a business transaction, an intermediary might introduce a supplier to a retailer but will not finalize any agreement between them.

Commercial agents, on the other hand, not only introduce parties but may also negotiate terms and bind the principal contractually. This distinction matters because the legal rights and protections available to intermediaries differ from those of agents. Courts have emphasized that whether a person is an intermediary or an agent affects obligations, liabilities, and entitlement to commissions.

Who Can Become an Agent?

Very few people are exempt from becoming an agent or exercising the authority given to them by another. An agent does not have to be sui juris, or able to act in their own right, to act in the interest of others. In truth, infants, outlaws, aliens, and others who would normally be considered incompetent to handle such affairs, are all eligible to act as an agent.

However, if someone is considered to be incompatible, they will not be allowed to act as an agent. For example, you could not act as an agent for someone who is looking to buy goods from you.

Duties and Liabilities of Intermediaries

If you are an agent acting as an intermediary, you must follow strict disclosure and neutrality rules. For example, real estate laws in some states, such as Texas, require brokers acting as intermediaries to disclose their role and remain impartial to both buyer and seller. Failure to do so can lead to conflicts of interest or even invalidation of the agreement.

Key responsibilities of intermediaries often include:

  • Full disclosure of their status as an intermediary.
  • Neutrality, avoiding favoritism to either party.
  • Compliance with statutory requirements, especially in regulated industries like real estate or financial services.

Intermediaries are not usually liable for the performance of the contract itself, but they must avoid misrepresentation and unauthorized actions.

What Are the Rights of an Agent?

An agent's rights stem from their obligations to the principals or third parties. Their rights against principals are as follows:

  1. To be properly compensated for their services, unless they were gratuitous. Compensation is usually referred to as a commission and is either regulated in an agreement or presumed by both parties.
  2. To be reimbursed for any expenses made on behalf of the agency, with interest.

If an agent has to enforce his entitlement to his commission or reimbursement, he now has a lien against the property. These rights arise in the creation of the contract or as a result of torts committed by the principal.

An agent's rights against a third party arise when the contract is put into writing and is understood to be a contract. For example, if a promissory note is given to an agent for the benefit of the principal, the money must be paid out to the agent.

When the agent contemplates the law, he or she becomes the contracting party. For example, if an agent sells the principal's products in his own name, he then becomes eligible to sue the buyer in his own name. The principal still has the right to sue, too.

When an agent is eligible to act as the principal, he becomes eligible to enforce the contract through action. For example, if an auctioneer sells products for someone else, he may create an action for the price simply because he is in possession of the product and has an interest in the goods.

If you need help acting as an agent in a contract, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

Comparing Rights of Agents and Intermediaries

Agents typically earn commission or reimbursement tied to the contracts they secure. Intermediaries, however, may only be entitled to a fee for introductions unless specifically contracted otherwise. This difference can significantly impact compensation disputes.

Additionally, while agents can sue or be sued in connection with contracts they help execute, intermediaries usually lack standing to enforce contractual obligations since they are not contracting parties. Businesses must clearly define whether a representative is an intermediary or an agent to prevent ambiguity in liability and payment structures.

Frequently Asked Questions

  1. What does it mean to act as an intermediary in a contract?
    It means you connect parties for negotiation but do not conclude contracts or bind the principal legally.
  2. Are agents and intermediaries the same?
    No. Agents can negotiate and contract on behalf of a principal, while intermediaries typically only make introductions.
  3. What are the risks of being an intermediary?
    Risks include liability for misrepresentation, failure to disclose status, or conflicts of interest if impartiality is not maintained.
  4. How do agents and intermediaries get paid?
    Agents usually receive commission or reimbursement, while intermediaries are typically compensated for introductions unless otherwise agreed.
  5. Why does the distinction matter legally?
    Because it determines rights, liabilities, and protections—misclassification could impact commissions, enforceability, and legal exposure.

If you need help identifying what are you an agent acting as an intermediary, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.