What is the relationship called when one party grants authority to another?

The correct answer, which identifies the relationship where one party grants authority to another, is referred to as an agency relationship. In this context, the principal is the party that grants authority, while the agent is the individual who receives that authority to act on behalf of the principal. This relationship is foundational in various sectors, particularly in real estate, where agents represent clients in transactions and negotiations.

Agency relationships are characterized by their fiduciary nature, meaning the agent is obligated to act in the best interests of the principal. This includes duties such as loyalty, obedience, disclosure, and accounting. The clear delineation of authority and responsibility in an agency relationship allows the agent to make decisions, enter contracts, and carry out actions that legally bind the principal.

The other options—contractual, partnership, and employment relationships—do not fully encapsulate this specific dynamic. While a contractual relationship may involve obligations between parties, it does not necessarily imply that one party has granted authority to another. A partnership involves a shared ownership and management structure, and an employment relationship typically denotes a different kind of authority in which an employer directs the work of an employee. However, neither of these captures the essence of the authority grant inherent in agency relationships.