What results from an agency relationship?

The correct answer relates to the legal framework of agency relationships, which inherently involve a principal and an agent. In an agency relationship, the agent is authorized to act on behalf of the principal, which establishes certain duties and obligations towards third parties. These obligations ensure that the interests of third parties are protected when the agent conducts business on behalf of the principal.

For example, when a funeral director (acting as an agent) makes arrangements with a vendor (a third party) on behalf of the family (the principal), the funeral director has a duty to ensure that the transaction is conducted fairly and ethically, adhering to the contractual obligations involved. This protects the rights and interests of all parties involved, especially the third party, who relies on the representation and actions taken by the agent.

The other options do not align with the fundamental characteristics of agency relationships. Personal interests are not the focus; rather, obligations center on fulfilling the duties owed to third parties and the principal. Limited liability typically does not apply directly in an agency context as the agent may still be liable for certain actions taken on behalf of the principal. Finally, unilateral obligations do not inherently define the reciprocal nature of agency relationships, which emphasize mutual responsibilities between the principal and the agent as well as the obligation to