What does agency law pertain to in business?

Agency law is a fundamental area of business law that focuses on the principles governing the relationship between agents and principals. This legal framework sets forth the rights, duties, and obligations that arise when one party (the agent) acts on behalf of another party (the principal).

In this relationship, the principal grants the agent the authority to make decisions or execute actions that bind the principal in transactions with third parties. Agency law is vital in various business contexts, including contracts, where the agent may enter into agreements that are legally enforceable against the principal.

Understanding this relationship is crucial for businesses to navigate legal liabilities and ensure that agents act within their authority, thereby protecting the interests of the principal. Therefore, the focus on agency relationships underlines the importance of transparency and accountability in business dealings, making option B the correct answer.