Which concept describes an agent acting on the principal's behalf and under the principal's control with the parties' consent?

• A. Actual authority
• B. Agency
• C. Apparent authority
• D. Estoppel

Answer: (B)

Agency describes a relationship where an agent acts on behalf of and under the direction and control of a principal, with the parties' mutual consent to that arrangement. This captures the essence: the agent is authorized to act for the principal and the principal can direct or control the agent’s actions within the agreed scope. Actual authority refers specifically to the power granted by the principal to act for them (express or implied), which is a form of authority the agent may have, but the situation described emphasizes the broader relationship itself rather than the source of power. Apparent authority occurs when a third party reasonably believes the agent has authority due to the principal’s representations, which can bind the principal even without actual authority. Estoppel deals with preventing a principal from denying the agency due to reliance on representations or conduct. Thus, the mutual relationship where the agent acts for and under the principal’s control with consent is best described as agency.