Why is a written agency agreement important?

A written agency agreement is crucial because it clearly defines the terms and responsibilities of both the principal and the agent, which helps prevent misunderstandings. By having a formal document in place, both parties can refer back to the agreement to clarify their roles, expectations, and any specific duties that have been outlined. This clarity is essential in ensuring that everyone understands their obligations, which can help avoid disputes or conflicts down the line.

While some states may have specific regulations regarding agency agreements, it is not the case that a written agreement is mandated by law in all states. Furthermore, a written agreement does not grant agents unrestricted authority; instead, it specifies their powers and limitations. Lastly, although a written agency agreement could contribute to a public record in certain situations, that is not its primary purpose. The main focus of such an agreement is to solidify the understanding between the principal and the agent.