Authority of Agents

Question 1

What are the two types of authority?

Answer 1

ACTUAL AUTHORITY

APPARENT AUTHORITY

Question 2

What are the two types of “Actual Authority”? Explain them.

Answer 2

Express actual authority:
The instructions which have been given to the agent, stating what is required and what is allowed. If the instructions are ambiguous, the agent should seek clarification from the principal. If the principal cannot be contacted, no liability will fall on the agent.

Implied actual authority:
The authority to do anything which is incidental to carrying out of the agent’s express instructions. An agent may also have implied authority to perform those acts which are usually performed by persons in the agent’s position. (Known as usual authority)

Question 3

Explain what is “Apparent Authority”.

Answer 3

The agent has no real authority to do the act in question. However, in a third-party view, they have such authority and are therefore able to bind their principal.

The principal must make some representation, by word or conduct to the third party that the agent is entitled to act on their behalf.

Question 4

What cases can “Apparent Authority” arise?

Answer 4

• The principal restricted the authority of a vividly appointed agent
• The apparent agent has never been appointed
• Unknown to the third party, the authority of the agent has been terminated