Which term describes the formal relationship of delegated authority between two parties, where one acts on behalf of the other?

• A. Delegation
• B. Director-ship
• C. Agency
• D. Partnership

Answer: (C)

Agency describes the formal relationship where one party (the principal) authorizes another (the agent) to act on the principal's behalf. Within the defined scope of authority, the agent can bind the principal in contracts and decisions, and owes duties of loyalty and care to the principal. This makes it the best term for a delegated authority relationship where actions are taken on behalf of the other. Delegation is about assigning tasks and control, but not necessarily the formal representation that creates binding authority. A director role relates to governance, not acting on behalf of another in dealings with third parties, and a partnership is a shared business arrangement, not a representation relationship.