The Principal-Agent Problem in economics is concerned with the problem of commercial agents/employees having altogether too much power. Historians on the other hand, are constantly searching for agency where structure or discourse seems to overwhelm any individual’s free will. Why do these disciplines view agency in such profoundly contradictory ways? This paper uses fatwas on wakala or “agency” relationships from Ibadhi Oman and Shafi’i Hadhramout to seek new avenues of understanding how this commercial relationship has evolved in the Muslim World. These fatwas are also contextualized through an examination of court cases and contractual documents that illustrate how such agency relationships operated in practice. The paper examines the complex cases where wakala contracts are drawn up, when they are not, and how the powers of a wakeel (agent) are exercised and constrained. This historical evidence particularly addresses the construction and operation of trust in agency relationships; a topic of long interest stemming from historical research in the medieval Geniza records. While some historians have simply assumed that trust is something that exists between members of the same family or community, this has been challenged by economists who have suggested that trust is really the reflection of informal cultural mechanisms of contractual enforcement. The paper tries to rescue trust from the enormous condescension of economics. The evidence from Arabic fatwas and legal documentation suggests that trust is better conceptualized as the consequence of efforts to build group identification, self-effacement and even altruism. Drawing on different forms of legal and economic documentation, the paper pieces together how trust is established within communities and across community lines. But also when trust is broken and when contractual enforcement mechanisms in Islamic and colonial law are drawn up to compensate for this lack of trust. Ultimately the paper will demonstrate how trusted agents act not in their self-interest or in the interests of the principal but rather conceive of their interests as subsumed within the larger whole of the family, partnership or community. This research suggests that the historical experience of capitalism cannot be extrapolated from the model of a rational economic individual but is deeply contingent on specific religious and social norms.