What term describes actions taken by an agent that are within the authority granted by the principal, whether express or implied?

Study for the Aceable Agent Finance Test. Study with flashcards and multiple choice questions, each question has hints and explanations. Get ready for your exam!

Actual authority is the power granted by the principal to act on the principal’s behalf, and it includes both express (explicitly stated) and implied (inferred from the principal’s conduct, duties, or customary practices) authority. When the agent operates within this scope, the principal is bound by the agent’s actions as if the principal had acted directly. For example, a broker given explicit authority to list a property and implied authority to negotiate reasonable terms can sign agreements within those boundaries. If the agent acts outside that scope, the principal isn’t bound unless there’s ratification or another basis like apparent authority created by the principal’s representations. This topic contrasts with ostensible (apparent) authority, which depends on how third parties view the agent’s power based on the principal’s actions, not on the actual grant of authority, and with agency coupled with an interest, which involves the agent having a stake in the subject matter.