In an agency relationship, who are considered third parties?

In an agency relationship, who are considered third parties?

• A. Clients
• B. Principals
• C. Customers
• D. Fiduciaries

Answer: (C)

In an agency relationship, third parties are individuals or entities that are not part of the contract between the principal and the agent but may be affected by the actions of the agency. Customers fit this definition as they interact with the agent and principal but are not directly involved in the agency relationship itself. Clients refer to the parties receiving the services, and principals are those who appoint the agent to act on their behalf; thus, they are part of the primary relationship rather than third parties. Fiduciaries refer to the agents who have a duty to act in the best interests of the clients. Therefore, customers, as third parties, are the correct answer because they are external parties who engage with the agency but do not hold a formal relationship with the principal or agent.

In an agency relationship, third parties are individuals or entities that are not part of the contract between the principal and the agent but may be affected by the actions of the agency. Customers fit this definition as they interact with the agent and principal but are not directly involved in the agency relationship itself.

Clients refer to the parties receiving the services, and principals are those who appoint the agent to act on their behalf; thus, they are part of the primary relationship rather than third parties. Fiduciaries refer to the agents who have a duty to act in the best interests of the clients. Therefore, customers, as third parties, are the correct answer because they are external parties who engage with the agency but do not hold a formal relationship with the principal or agent.