Explain what do you mean by Actual Authority

Question

Explain what do you mean by Actual Authority?

Answer 1

A principal is bound by any actions that are within the agent’s actual authority. In this context, actual authority refers to authority that was:

a. Expressly given (orally or in writing); or

b. Could be implied by the principal’s conduct (e.g., principal pays for the goods); or

c. Could be implied based on the usual authority given to a person appointed to that position (e.g., corporate secretary) (also referred to as commercial usage).

The principal is bound whether or not the third party is aware of the exact scope of the agent’s actual authority.