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.
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.
|This page uses Creative Commons Licensed content from Wikipedia (view authors).|