The issue thus drawn centered on the question of representation. From the colonies' point of view, it was impossible to consider themselves represented in Parliament unless they actually elected members to the House of Commons. But this idea conflicted with the English principle of "virtual representation," according to which each member of Parliament represented the interests of the whole country, even the empire, despite the fact that his electoral base consisted of only a tiny minority of property owners from a given district. The rest of the community was seen to be "represented" on the ground that all inhabitants shared the same interests as the property owners who elected members of Parliament.
Most British officials held that Parliament was an imperial body representing and exercising the same authority over the colonies as over the homeland. The American leaders argued that no "imperial" Parliament existed; their only legal relations were with the Crown. It was the king who had agreed to establish colonies beyond the sea and the king who provided them with governments. They argued that the king was equally a king of England and a king of the colonies, but they insisted that the English Parliament had no more right to pass laws for the colonies than any colonial legislature had the right to pass laws for England.
The British Parliament was unwilling to accept the colonial contentions. British merchants, however, feeling the effects of the American boycott, threw their weight behind a repeal movement, and in 1766 Parliament yielded, repealing the Stamp Act and modifying the Sugar Act. However, to mollify the supporters of central control over the colonies, Parliament followed these actions with passage of the Declaratory Act. This act asserted the authority of Parliament to make laws binding the colonies "in all cases whatsoever."
Source: U.S. Department of State