The first thing we must consider in determining whether or not an agency relationship exists is consent. Both the principal and the agent just have given informed consent to enter the agency relationship. This can usually take place explicitly or implicitly depending on the jurisdiction. In the clear cut cases, there will be some written agreement or clear understanding between the parties as to what the role of the agent will be this agreement will both govern the scope of the agency and be used to clearly show it was entered into by two informed parties. You don’t need a contract, however, to establish agency.As with many areas of the law, it’s not always that clear. In ambiguous cases, actions or statements that indicate knowledge and consent regarding the agent’s authority to act on behalf of the principal is probably enough. Most jurisdictions are going to apply an objective standard to determine if a reasonable person under the circumstance would have given informed consent and understood the implications of the relationship. That is to say, if the issue is before a court, there will often be an analysis of what the parties said and how they acted. Even if they claim there was no agency relationship, one could be found if they acted as such. It can be a complicated exercise which is why we recommend always utilizing a clear and unambiguous contract when dealing with a potential agency relationship. It is also important to consider that some jurisdictions may require an agency relationship be set forth in writing so consult with your local business attorney to make sure everything is covered for your desired arrangement.