Legal Definitions - instructed delegate

An instructed delegate is an individual or entity that has been given specific, binding directions by another party (the principal) and is expected to follow those directions precisely. Unlike an agent with broad discretion, an instructed delegate's authority is limited by the detailed instructions they receive. This means they must act according to those instructions, even if they might personally prefer an alternative approach or believe a different course of action would be more beneficial. Their role is to implement the principal's will as communicated, without exercising independent judgment on the core decisions.

Here are some examples to illustrate this concept:

• Real Estate Transaction: A homeowner instructs their real estate agent to present an offer of exactly $450,000 for their property and explicitly states, "Do not accept anything less, and do not engage in any counter-offers below this amount."

  Explanation: In this scenario, the real estate agent acts as an instructed delegate. Their discretion is removed regarding the selling price and negotiation strategy. They are legally bound to present the $450,000 offer and cannot accept a lower bid or initiate a counter-offer for a different amount, even if they believe a slightly lower price might secure a quicker sale.

• Corporate Negotiation: A company's CEO sends a procurement manager to negotiate a supply contract with a new vendor, providing a detailed list of non-negotiable terms, including a maximum unit price of $100 and a mandatory delivery schedule. The CEO explicitly states, "You cannot deviate from these terms under any circumstances."

  Explanation: The procurement manager is an instructed delegate. They must adhere strictly to the CEO's specific instructions regarding pricing and delivery. They cannot make concessions beyond the specified limits or agree to terms not pre-approved by the CEO, regardless of how the negotiation progresses or what they might personally deem beneficial for the company.

• Shareholder Proxy Vote: A shareholder who cannot attend their company's annual meeting appoints another individual as their proxy. The shareholder provides explicit written instructions: "Vote 'yes' on Proposal 1 (Election of Directors), 'no' on Proposal 2 (Executive Compensation), and abstain on Proposal 3 (Auditor Appointment)."

  Explanation: The proxy holder functions as an instructed delegate. They are legally obligated to cast the votes exactly as directed by the shareholder. They cannot exercise their own judgment or vote differently, even if they personally disagree with the shareholder's choices or believe a different vote would be more advantageous for the company.