What is an agreement called where one party acts on behalf of another party?

The correct term for an agreement where one party acts on behalf of another party is known as an "agency." In real estate and many other fields, agency refers to a fiduciary relationship in which one individual, the agent, is authorized to act on behalf of another individual, known as the principal. This relationship involves the agent performing tasks, making decisions, and executing transactions as directed by the principal, typically with the expectation that the agent will act in the principal's best interests.

Understanding the agency is crucial in real estate transactions, as agents are responsible for representing their clients and must adhere to a legal and ethical duty of loyalty, care, and full disclosure. The concept emphasizes the trust and reliance that is placed within the relationship between the principal and the agent, highlighting the importance of this role in facilitating transactions and negotiations.

The other terms in the context of this question do have distinct meanings but do not directly describe the relationship characterized by acting on another's behalf. For instance, a contract refers to a legally binding agreement between parties, while a partnership denotes a business arrangement where two or more individuals share ownership and responsibilities. Representation, while related to agency, does not specifically capture the agreement aspect where one party is authorized to act on another’s behalf.