What Is the Scope of Authority in Contract of Agency

Apparent authority (also known as “alleged authority”) exists when the principal`s words or conduct would lead a reasonable person in the third party`s position to believe that the agent was authorized to act, even if the principal and alleged representative had never discussed such a relationship. For example, if a person appoints a person to a position that involves powers similar to those of an organization, those who are aware of the appointment may assume that there is a clear authority to do the things that are usually entrusted to someone in such a position. If a client gives the impression that an enforcement agent is authorized but there is no actual power of attorney, third parties are protected as long as they have acted appropriately. This is sometimes referred to as the “estoppel agency” or the “doctrine of perseverance,” which prevents the client from refusing to grant powers if third parties have changed their position to their detriment by relying on the representations made. [5] The officer`s authority often determines whether a principal or representative is responsible for a prosecution. If the agent acts under the authority of the client, then the agent was most likely under the client`s control, which made the client liable. In most cases, the client has more money than the agent. Therefore, victims want to sue a client because it means more money, even though it would be easier to sue the agent. An agent is a person who agrees to represent another person called a principal.

An agency relationship is usually formed by an agreement between the two parties. An agent can only act on behalf of a principal on certain matters (depending on the agreement). The authority of an agent is transferred by his client. The scope of the power conferred on the representatives of principals in commercial matters is generally a combination of all or part of the following: introducing, concluding or otherwise treating contracts between the principal and the customers. A representative is not necessarily authorized to bind a client in contractual relationships; It depends on the type of order from the agent and the authority the client gives to the agent. If such an authority exists, the agent has the power to bind the client to a contract. In the absence of such an authority or where the act in question does not fall within the competence of the competent authority, the contract shall not be binding on the contracting entity. There are situations where an agent`s authority is created, even if the person is not an agent.

Examples of these different situations include: If the agent was outside their authorization area, the customer is not responsible for the violations. The only exception is if the procuring entity has ratified an agreement. If the agent acted outside the scope of the authorization, he may be held liable for breaches or breaches of contract. An explicit power of attorney means that an agent has been expressly informed that he or she may act on behalf of a principal. In Georgia, the doctrine of apparent authority is based “on the principle that one of the two innocent parties suffers from the unlawful act of another, the loss should be incumbent on the one who, by his conduct, created the circumstances that allowed the third party to commit injustice and cause loss”. Thus, Georgia makes less distinction between client and agent than other states. A third party may rely in good faith on the representation of a person who identifies himself or herself as the representative of another person. It is not always inexpensive to verify that a person presented as authorized to act for another actually has such authority. If it is later found that the alleged officer acted without the necessary authority, the officer is usually held liable. Connecticut uses the definition set out in Restatement (Third) of Agency § 2.03 (2006): “Apparent authority is the power that an agent or other actor possesses to influence a principal`s legal relationship with third parties if a third party has reasonable grounds to believe that the actor is authorized to act on behalf of the principal and that belief is due to the client`s protests, to recognize apparent authority and apparent free will as distinct doctrines. In India, section 182 of the Contracts Act 1872 defines an agent as “a person who performs an act for another person or who represents another person before a third party”. [2] However, this law only applies to contract law in India.


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