Which of the following is NOT a necessary element to create an agency relationship?

To establish an agency relationship, certain elements must be present, including understanding, reliance, and the perception of representation. Consideration, which refers to something of value exchanged between parties, is not a necessary element of agency. An agency relationship can be formed even without a formal exchange of consideration.

Understanding is vital as it reflects that both the principal and agent recognize the nature of their relationship and the responsibilities involved. Reliance emphasizes that the principal relies on the agent to act on their behalf, which is a fundamental characteristic of the agency. The perception of representation speaks to how third parties view the relationship and trust that the agent has the authority to represent the principal effectively.

Without the need for consideration, agency relationships can be created through mutual agreement and intent, making it clear that consideration is not essential for establishing this legal connection.