Who are the principal, agent, and third party in an agency transaction?

In the context of agency law, an agency transaction involves a relationship between three distinct parties:1

• The Principal: The person or entity who engages another to act on their behalf. This may be an individual, a partnership, or a corporate entity. The principal delegates authority to the agent to manage business, sell goods, or perform other work, thereby extending their own sphere of activity.1
• The Agent: The person authorized to act for the principal. The agent is responsible for dealing with third parties to affect the legal position of the principal. Agents are bound by fiduciary duties, including loyalty, obedience, and the exercise of care, and must act solely in the interest of the principal.12
• The Third Party: The external party with whom the agent interacts or concludes a contract on behalf of the principal.1

This structure creates a twofold relationship: the internal relationship between the principal and agent, and the external relationship where the agent represents the principal in dealings with the third party.1