What is meant by Implied Agency Authority?

• A. Authority given in formal contracts
• B. Authority based on an agent's conduct
• C. Authority based on written instructions
• D. Authority restricted to specific tasks

Answer: (B)

Implied agency authority refers to the authority an agent has to act on behalf of a principal, which is derived from the actions or conduct of the agent or the principal, rather than explicitly stated in a written contract. This concept is founded on the idea that certain powers may be inferred from the relationship between the parties involved, allowing an agent to make decisions or take actions that are necessary to fulfill their responsibilities, even if those actions are not explicitly documented.

For example, if an agent is consistently making decisions on behalf of a principal in a particular context, it can be implied that the agent has the authority to continue to act in that manner. This authority is important in practical applications, as it enables transactions and interactions to proceed smoothly without the need for reassessing the terms of engagement each time an agent needs to make a decision.

On the other hand, formal contracts specify authority in writing, while written instructions provide clear, direct orders that do not rely on inference. Authority restricted to specific tasks does not encompass the broader implications of implied authority, which can cover a range of actions allowed by an agent’s conduct and the context of the principal-agent relationship. This understanding of implied authority is crucial in scenarios where the actions of the agent suggest permissions that may not have