All this is clearly defined so as to make it easier for any given business activity to take place without any legal wrangling with respect to agency.
It is a contractual relationship between two parties i.e. the Principal authorizes another party (agent) to do on his or her behalf various acts, which directly affect the principal's actions in relation to third parties. This gives rise to a legally recognized special relationship (fiduciary relationship), which imposes a high level of trust and responsibility on the agent (http:artslaw.com.aureferenceinfo01).
One of the basic requirements of any agent is to act towards improving the rights and situation of the principal to the best of his ability ensuring that in now way does he compromise the position of the principal.
CAPACITY TO ACT AS PRINCIPAL AND AGENT
It is said that only those persons who have full contractual capacity may hire an agent i.e. the principals themselves. On the other hand agents can be employed even if they do not have full contractual capacity and can employ the rights and privileges given to them through the contractual agreement and these cannot under any circumstances exceed the powers of the princ