The correct option for the question "Which of the following must be present in an agency by agreement?" is C. Consent. Explanation of the Correct Answer (C. Consent)

1. Definition of Agency: An agency relationship is a fiduciary relationship where one party (the agent) is authorized to act on behalf of another party (the principal) in business dealings. This relationship is fundamental in commerce, as it allows for the delegation of authority and responsibilities.
2. Importance of Consent: For an agency relationship to exist, there must be mutual consent between the principal and the agent. This means that both parties agree to the terms of the agency. The principal must agree to allow the agent to act on their behalf, and the agent must agree to accept that responsibility. Without this consent, there is no legal basis for the agency relationship.
3. Legal Framework: The law requires that the consent be clear and unequivocal. This can be expressed verbally, in writing, or implied through the conduct of the parties involved. For example, if a business owner verbally tells an employee to negotiate a contract on their behalf, that verbal agreement constitutes consent.
4. Agency by Agreement: In an agency by agreement, the relationship is established through a contract or mutual understanding. This is distinct from other forms of agency, such as agency by necessity or agency by estoppel, which may not require explicit consent.

Why the Other Options Are Incorrect or Weaker

• A. Intentions: While intentions are important in establishing the purpose of the agency, they do not constitute the legal basis for the relationship. Intentions alone do not create an agency; there must be a clear agreement and consent.
• B. Will: The term "will" can be ambiguous in this context. While both parties must have the will to enter into an agreement, it is the consent that legally binds them to the agency relationship. Will alone does not imply that both parties have agreed to the terms of the agency.
• D. Authority: Authority refers to the power granted to the agent to act on behalf of the principal. However, authority cannot exist without prior consent. The principal must first consent to the agent's authority before any actions can be taken. Therefore, authority is a result of consent, not a prerequisite for establishing the agency relationship.

Summary of Key Points

• Consent is essential for establishing an agency relationship; both parties must agree to the terms.
• Agency by agreement is formed through mutual understanding, which can be verbal or written.
• Intentions and will are not sufficient on their own to create an agency; they must be accompanied by consent.
• Authority arises from consent but does not establish the agency relationship by itself.

This understanding of agency is crucial for anyone involved in commerce, as it lays the foundation for many business transactions and relationships.