Actual Authority and Apparent Authority

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The authority of an agent is the act which he is allowed or authorised to do by his principal, and which will bind his/her principal. Usually, the principal will only be bound by the act of the agent if the agent acts within his/her authority. There are two types of authority which an agent could rely on, namely actual authority and apparent or ostensible authority. 

Actual authority is the authority given by the principal to the agent and could be in written or oral form. The capacity of an agent to act is the same as the capacity of his/her principal. The express actual authority of an agent means that an agent has been told orally or in written form by the principal to act on his behalf. Hence, the agent’s authority may be restricted by the terms of agreement known as power of attorney. However, if the principal has given a vague or ambiguous express authority to the agent, then any act that can be imputed to any of the possible meanings of the authority will be considered as proper authorisation as long as he/she does in good faith.

Implied actual authority is whatever authority that is necessary or incidental to the effective carrying-out of the agency in the usual way. An agent usually has implied authority when a person employs him/her to act on behalf of the principal where it is demonstrated in the case of Hely-Hutchinson v Brayhead Ltd [1968] 1 Q.B. 549 at 583 which Lord Denning M.R held that a person that is being appointed to be the managing director of the company has been impliedly authorise to undertake all the things that fall within the scope of that office. The principal must have consented to the agent having authority to act in specific way and thus implied authority can be seen as the actual or real authority of the agent. If it is found that the principal has not consented, then the agent cannot claim that he/she has the implied authority from the principal. However, in such a case, the third party may rely on the agent’s apparent...
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