A party who employs another person to act on their behalf is referred to as the ______.

The party who employs another person to act on their behalf is referred to as the principal. In agency law, the principal is the individual or entity that grants authority to another person, known as the agent, to perform tasks or make decisions on their behalf. This relationship creates a binding legal connection where the principal is responsible for the actions taken by the agent within the scope of the authority granted.

Understanding this role is fundamental in business law, as it establishes the basis for responsibilities and liabilities. For example, if the agent enters into a contract while acting within the authority granted by the principal, the principal is generally bound by that contract. This highlights the importance of clearly defining the scope of authority in the agency relationship.

The other options represent different roles or contexts. The agent is the person who acts on behalf of the principal, the contractor typically refers to someone hired to perform a specific task or project, often independently, and a broker commonly acts as an intermediary facilitating transactions between parties rather than representing someone directly. Each of these roles has distinct legal implications compared to that of a principal in an agency relationship.