Also known as: actual agencies · actual authority
Written by attorneys · grounded in primary & secondary sources — see below
A consensual relationship in which one person acts as agent for another because the principal has actually employed the agent and granted authority to act on the principal's behalf. The agent's power derives directly from the principal's manifestation of consent rather than from any appearance created for third parties.
Anthony Arnold retained Austin Abbott as counsel in pending litigation. Arnold expressly told Abbott that any settlement offer above a stated amount required Arnold's personal approval. Abbott nevertheless accepted an offer from the opposing party without obtaining that approval. Because Abbott acted without actual authority, the settlement cannot bind Arnold even though the opposing party relied on Abbott's representations.
Arthur Abrams, a passenger on a Royal Caribbean vessel, suffered injuries after the ship's doctor and nurse provided negligent care. Patricia Franza sued Royal Caribbean under an actual agency theory, alleging the medical staff were employees acting within the scope of authority granted by the cruise line. The court examined whether the line had in fact employed and controlled the staff, which would establish actual agency and impose vicarious liability.
Select any source to read its text and confirm it supports the definition.
Actual agency exists only when the principal has in fact employed the agent and granted authority through a consensual manifestation. Apparent agency arises when the principal's conduct creates a reasonable belief in a third party that authority exists, even if no actual authority was granted. The distinction matters because actual agency binds the principal regardless of third-party notice, while apparent agency protects only reasonable reliance by outsiders.
Supporting sources
Direct statements from the principal to the agent granting power, or a course of dealing in which the principal consistently permits the agent to act in a particular way, establish actual authority. Internal revocation of that authority ends actual agency even if the third party remains unaware. Courts look to the principal-agent relationship itself rather than outward appearances.
Supporting sources
No. Actual authority granted by a power of attorney terminates upon the principal's death or, for a non-durable instrument, upon the principal's incapacity. The agent's power is rooted in the principal's personal consent, which ends with these events. Third parties may receive separate good-faith protections, but those do not preserve the agent's actual authority.
Supporting sources
…is obvious that implied authority cannot, by its very nature, be inconsistent with express authority because any expression of actual authority must control. William A. Gregory, The Law of Agency And Partnership § 15 (3d ed.2001). For example, as it would apply to this case, the chief executive officer possesses the authority to…