Which of the following correctly defines a principal-agent relationship?

A) The relationship between a superior and a subordinate.

B) The relationship between the two superiors.

C) The relationship between two subordinates.

D) The relationship between a supervisor and a subversive.

A) Is the correct option.

Under principal and agent relationship principal is bound by all the deeds and actions of the principal. The principal will be liable for all the acts and liabilities that an agent has incurred. Under this principal appoints an agent who will act on his/her behalf. Hence option (a) is the correct option.

The agent is bound to act as per the needs and instructions of the principal so there is a kind of superior and subordinate relationship. Hence it will not be appropriate to say that it a superior to the superior relationship. Hence option (b) is the incorrect option.

There is a kind of senior-junior relationship hence two individuals must not be of the same designation. Hence it will be inappropriate to say that it is a subordinate to the subordinate relationship. Hence option (c) is the incorrect option.

The principalPrincipa does not supervise the acts and deeds of the agent he just directs the agent about the acts he /she has to carry on his behalf. So it will be inappropriate to say that there exists a superior and subversive relationship. Hence option (d) is the incorrect option.