An "agent" is person or entity who is formally authorized to act on another's behalf. The "principal" authorizes an agent to represent his, her or its legal interests and to perform legal acts that bind the principal. The agent has a special legal relationship with the principal and must act in the best interests of the principal. The terms of an agency relationship are often spelled out in a written contract. An example of an agent is a real estate broker, who represents the interest of a seller or real estate (the principal).