Also known as: inherent agencies · inherent agency power
Written by attorneys · grounded in primary & secondary sources — see below
A power of an agent derived solely from the agency relation and not from authority, apparent authority, or estoppel. It exists to protect persons harmed by or dealing with the agent.
Ironclad Industries employs Idina Iverson as plant foreman. For years Iverson has ordered raw materials from vendors using company letterhead. Iverson signs a two-year exclusive supply contract with a new vendor even though internal policy limits her to month-to-month orders. The vendor sues when Ironclad refuses to perform. Inherent agency power arising from Iverson's position allows the vendor to hold Ironclad liable.
Atlantic Richfield places a manager in charge of a Nogales service station. The manager orders equipment and services beyond the scope of any actual or apparent authority granted by the company. A supplier who dealt only with the manager sues Atlantic Richfield for payment. Inherent agency power derived from the manager's position in the agency relation binds the company to protect the supplier.
Select any source to read its text and confirm it supports the definition.
No. The power arises solely from the agency relation and protects third parties even when they have no knowledge of the principal or any manifestations by the principal.
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Inherent agency power does not depend on any manifestation by the principal to the third party. It exists independently to safeguard persons harmed by or dealing with the agent because of the agency relation itself.
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No. Internal restrictions unknown to the third party do not prevent the power from arising when the agent's act falls within the ordinary scope of the position created by the principal.
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The doctrine allocates risk to the principal who created the agency relation and placed the agent in a position that can harm or mislead third parties, thereby protecting reasonable reliance in ordinary commercial dealings.
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