Legal Definitions - actual authority

Actual authority refers to the genuine power an agent possesses to act on behalf of a principal, because the principal has intentionally granted that power. This grant of authority can occur in two primary ways:

• Express actual authority is when the principal directly and explicitly tells the agent what actions they are authorized to take. This is often communicated through written contracts, verbal instructions, or specific directives.
• Implied actual authority is the power an agent reasonably believes they have, based on the principal's conduct, the nature of the agent's position, or what is customary and necessary to carry out their express authority. It's not explicitly stated but is understood as part of the job or task.

Here are some examples to illustrate actual authority:

• Example 1 (Express Actual Authority): A small business owner, Mr. Henderson, hires a new office manager, Ms. Chen. During their initial meeting, Mr. Henderson hands Ms. Chen a document stating, "You are authorized to order office supplies up to $500 per month and approve invoices from our cleaning service."

  Explanation: Ms. Chen has express actual authority to order supplies and approve cleaning invoices because Mr. Henderson directly and explicitly communicated these powers to her in writing. There is no ambiguity about the scope of her power for these specific tasks.

• Example 2 (Implied Actual Authority): A real estate developer, Apex Properties, hires a project manager, Mr. Davies, to oversee the construction of a new apartment complex. Mr. Davies' contract states he is responsible for "managing all on-site operations." While the contract doesn't explicitly mention hiring subcontractors for specific tasks like electrical work, Mr. Davies proceeds to solicit bids and hire a licensed electrician for the project.

  Explanation: Mr. Davies has implied actual authority to hire subcontractors. Even though it wasn't explicitly written in his contract, it is a reasonable and customary action for a project manager responsible for "managing all on-site operations" to ensure the project's completion. The principal (Apex Properties) would reasonably expect him to take such steps to fulfill his duties.

• Example 3 (Both Express and Implied Actual Authority): A marketing director, Ms. Rodriguez, tells her junior marketing assistant, Leo, "Please organize all the logistics for our upcoming product launch event, including booking the venue and arranging catering." Leo books a suitable event space and a catering company. He also creates and prints professional invitations, knowing that invitations are a standard and necessary component of any product launch event.

  Explanation: Leo has express actual authority to book the venue and arrange catering because Ms. Rodriguez directly instructed him to do so. He also has implied actual authority to create and print invitations. While not explicitly mentioned, it is a reasonable and customary action for someone organizing a product launch event to ensure attendees are informed, thereby fulfilling the broader instruction to "organize all the logistics."