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Implied authority

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Definition Edit

Implied authority is the authority considered to be held by the agent by virtue of being reasonably necessary to carry out his express authority. As such, it can be inferred by virtue of the position held by an agent.

Overview Edit

For example, partners have authority to bind the other partners in a law firm, their liability being joint and several, and in a corporation, all executives and senior employees with decision-making authority by virtue of their position have the authority to bind the corporation.

Even if the agent does act without authority, the principal may ratify the transaction and accept liability for the transactions as negotiated. This may be express or implied from the principal's behavior, e.g. if the agent has purported to act in a number of situations and the principal has knowingly acquiesced, the failure to notify all concerned of the agent's lack of authority is an implied ratification to those transactions and an implied grant of authority for future transactions of a similar nature.

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