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Actual authority

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Definition Edit

Actual authority arises where the principal's words or conduct reasonably cause the agent to believe that he or she has been authorized to act. This may be express in the form of a contract or implied because what is said or done make it reasonably necessary for the person to assume the powers of an agent.

Overview Edit

If it is clear that the principal gave actual authority to the agent, all of the agent's actions falling within the scope of the authority given will bind the principal.

This will be the result even if, having actual authority, the agent in fact acts fraudulently for his own benefit, unless the third party with whom the agent is dealing was aware of the agent's personal agenda. If there is no contract but the principal's words or conduct reasonably led the third party to believe that the agent was authorized to act, or if what the agent proposes to do is incidental and reasonably necessary to accomplish an actually authorized transaction or a transaction that usually accompanies it, then the principal will be bound.

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