Legal Definitions - actual agency

Actual agency describes a legal relationship where one person, known as the agent, has been genuinely authorized by another person, the principal, to act on their behalf. This authority is real and exists because the principal has communicated it to the agent, either directly or indirectly.

There are two main types of actual agency:

• Express Actual Authority: This occurs when the principal explicitly grants authority to the agent, either verbally or in writing. The principal directly states what the agent is permitted to do.
• Implied Actual Authority: This authority is not explicitly stated but is reasonably necessary for the agent to carry out the express authority given by the principal. It can also arise from the agent's position, custom, or past dealings between the principal and agent.

Here are some examples illustrating actual agency:

Example 1: Business Owner's Written Directive

A small business owner, Mr. Henderson, plans to be out of the country for a month. Before leaving, he gives his assistant, Ms. Chen, a signed document stating, "Ms. Chen is authorized to approve and pay invoices for office supplies up to $1,000 each during my absence." While Mr. Henderson is away, Ms. Chen receives an invoice for $750 for new printer toner and approves its payment.

This demonstrates express actual authority because Mr. Henderson explicitly and in writing granted Ms. Chen the specific power to approve and pay invoices within a defined monetary limit. Her action of approving the $750 invoice falls directly within the authority he clearly communicated.

Example 2: Real Estate Agent's Marketing Activities

Ms. Rodriguez hires a real estate agent, Mr. Davies, to sell her house. Their written contract states, "Mr. Davies will list and market Ms. Rodriguez's property at 123 Oak Street for sale." Without asking Ms. Rodriguez for explicit permission for each step, Mr. Davies arranges for professional photos of the house, places a "For Sale" sign in the yard, and schedules open houses.

This illustrates implied actual authority. While the contract didn't explicitly list "taking photos" or "placing signs," these actions are customary and reasonably necessary for Mr. Davies to fulfill his express authority to "list and market" the property effectively. These powers are implicitly understood as part of his role as a real estate agent tasked with selling the house.

Example 3: Restaurant Manager's Daily Operations

Chef Antoine is the head chef and manager of a popular restaurant. One evening, a key ingredient for a signature dish runs out unexpectedly. Without contacting the restaurant owner, Chef Antoine immediately sends a junior chef to a nearby specialty store to purchase the necessary ingredient, ensuring the dish can still be served to customers.

This is an example of implied actual authority arising from Chef Antoine's position and the nature of running a restaurant. As the manager, it is implicitly understood that he has the authority to make day-to-day operational decisions, such as purchasing ingredients to prevent service disruptions, without needing explicit, moment-by-moment approval from the owner. These actions are inherent to his role and expected duties.