A contract that employs one person to act on behalf of another person and to represent the interests of that person to third parties creates:

A contract that employs one person to act on behalf of another and to represent that person's interests to third parties establishes an agency relationship. In this context, agency refers to a fiduciary relationship wherein one party, the agent, is authorized to act on behalf of another party, the principal. This relationship is founded on trust and the agent's duty to act in the best interest of the principal while conducting business, signifying the representation of the principal’s interests in transactions.

Agency relationships are fundamental in the real estate industry, as they allow real estate professionals, such as brokers and agents, to advocate effectively for their clients. The establishment of this relationship triggers specific legal obligations, including loyalty, disclosure, and accountability, which enhance the level of trust between the parties.

The other options do not apply in this context, as they pertain to different legal concepts. A fee simple defensible relationship involves property ownership rights under certain conditions, owelty refers to an adjustment in property shares, and a lis pendens is a notice of pending litigation related to property but does not create a representation relationship like agency does.