Legal Definitions - implied authority

Implied authority refers to the power an individual (known as an "agent") has to act on behalf of another person or entity (the "principal"), even if that power wasn't explicitly stated or written down. It is a form of actual authority, meaning the principal genuinely intends for the agent to have this power, based on the circumstances.

This authority typically arises in a few ways:

• When certain actions are reasonably necessary to carry out an expressly authorized task.
• From the specific job title or position an agent holds, which inherently suggests certain powers.
• When the principal has consistently allowed or failed to object to the agent's past actions, thereby signaling approval for similar future actions.

Here are some examples to illustrate implied authority:

• Example 1: Reasonably Necessary Actions

  Imagine a homeowner who lives out of state hires a local handyman to manage the renovation of their kitchen. The homeowner explicitly authorizes the handyman to "oversee all aspects of the kitchen renovation, including hiring contractors and purchasing materials." While the homeowner didn't specifically say, "You can sign for deliveries," the handyman has the implied authority to sign for deliveries of cabinets, appliances, or other construction materials. This action is reasonably necessary to fulfill the express task of managing the renovation and ensuring materials arrive on site.

• Example 2: Authority from Job Title

  Consider a company's Marketing Director. Even if their employment contract doesn't list every single permissible action, the Marketing Director has implied authority to approve advertising copy, negotiate contracts with advertising agencies within a certain budget, or authorize the creation of promotional materials. These actions are typically associated with the responsibilities of a Marketing Director and are understood to be part of their role in promoting the company's products or services.

• Example 3: Principal's Past Conduct

  Suppose a small business owner has an administrative assistant who, for the past two years, has regularly ordered office supplies from a specific vendor and paid the invoices using the company credit card. The owner has always reviewed and approved these credit card statements without question. One month, the assistant places a larger-than-usual order for new ergonomic chairs for the entire office. Even though the owner never explicitly told the assistant, "You have permission to order office furniture," the owner's consistent acceptance of the assistant's past purchasing actions has created implied authority for the assistant to make such purchases on behalf of the business.