A person who authorizes another to act on his behalf is called what?

• A. The principal
• B. The agent
• C. The client
• D. The broker

Answer: (A)

In agency relationships, the person who gives someone else the authority to act on their behalf is the principal. The principal hires or authorizes an agent to perform tasks and make decisions within the scope of that authority, and the agent owes fiduciary duties to the principal, acting in the principal’s best interests. In real estate, the party who engages the broker to represent them—for example, in a listing or buyer representation agreement—is the client, but the one who authorizes the agent to act is the principal. The broker serves as the intermediary facilitating the relationship. So the person who authorizes someone else to act for them is the principal.