Concepts Definitions

• Agent: An individual authorized to represent another (known as the principal) in dealings with third parties.
• Principal: The person who appoints an agent to represent them in business dealings with third parties.
• Employee: A person who is hired by another, typically works under direct supervision, and usually receives a fixed salary with taxes withheld by the employer.
• Independent Contractor: A self-employed individual who contracts to perform work for another but is not subject to the same level of control and supervision as an employee. They are typically paid commissions and are responsible for their own taxes. In real estate, salespersons often work as independent contractors for a broker.
• Agency: The relationship between a principal and an agent, where the agent is authorized to act on the principal’s behalf. It can be formed by agreement, estoppel, or ratification.

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