What does an agent do on behalf of the principal?

An agent acts on behalf of the principal to create legal relationships with third parties. This key function of forming contracts entails representing the principal's interests in negotiations and agreements, thus ensuring that those contracts are legally binding upon the principal once executed by the agent within the scope of their authority. This relationship is fundamental in business and law, as it allows individuals or entities to engage in transactions without having to personally handle every detail.

In contrast, providing financial advice, acting as a mediator, or imposing legal obligations does not accurately describe the core function of an agent. While an agent may provide financial advice or engage in mediation as part of their responsibilities, these actions are secondary to their primary role of contract formation. Imposing legal obligations is typically a function of the law itself rather than the agent's role, which primarily involves facilitating agreements that bind the principal to such obligations. Thus, the essence of the agent's role is succinctly captured in the ability to form contracts on behalf of the principal, making that the correct choice.