In this video, I discuss actual authority whether it is expressed or implied in agency law.
Start your free trial: ✅https://farhatlectures.com/

Actual authority refers to the power an agent believes they have due to the principal's communication. This type of authority enables an agent to make binding contracts on behalf of the principal with third parties. There are two types of actual authority: express and implied.

Express Actual Authority: This is the authority explicitly given to the agent by the principal. It is clearly stated within the agency agreement. For instance, if a principal hires an agent to sell a property, the agent has express actual authority to negotiate and close sales deals for that property.

Implied Actual Authority: This refers to authority that the agent can reasonably assume to possess, alongside the express authority. It includes powers necessary to effectively execute the express authority. For example, if an agent is hired to manage a retail store (express authority), they implicitly have the authority to hire staff, order stock, and make daily operational decisions to effectively manage that store.

The termination of actual authority, which allows an agent to act on behalf of a principal, can happen in several ways:

Act of the Parties: This occurs when either the principal revokes the authority or the agent renounces it. If this termination breaches their contract, damages might be sought. An agency coupled with an interest can only be terminated by the agent.

Example: A principal hires an agent to manage a property. If the principal decides to revoke this authority (revocation) or if the agent chooses to stop managing the property (renunciation), the actual authority is terminated.
Accomplishment of Objective or Expiration of Stated Period:

Objective Accomplishment: If the agency is for a specific task, like appointing an agent to purchase a property (Blackacre), the authority ends once the task is completed.
Expiration of Stated Period: If the agency has a time limit (e.g., six months), the authority ends when this period expires. Without a specified time, it ends after a reasonable period.
Example: Phil appoints Andrea to buy a property (Blackacre) for him. Andrea's authority to act on Phil's behalf terminates as soon as she successfully purchases Blackacre.
Automatic Termination of Actual Authority: This happens due to certain legal events, without any action from the principal or agent:

Death or incapacity of the principal or agent.
Bankruptcy of the principal.
Failure to obtain a necessary license.
Destruction of the subject matter (e.g., an agent hired to buy a specific car, but the car is destroyed before purchase).
Subsequent illegality (e.g., changes in laws making the agent's actions illegal).
Example: Paula hires Alex to buy an antique car. However, the car is destroyed in an accident before Alex can make the purchase. This event automatically terminates Alex's authority to act for Paula in this matter.


#cpaexaminindia #cpaexam #cpacourse