Law of Agency of action

Universal agents are those that hold a broad category of authority of action on behalf of their principals. They have the legal provisions and mandates of powers of attorney or could have professional relationship such as client and lawyer relationships. General agents are those that have a limitation in their authoritative power in conducting various business transactions limited to a given time frame. Special agents refers to the agents who have the sublime authority of conducting specific levels of transactions or elsewhere a single set of transaction within a specified time frame.

Since the agent is deemed to act on full behalf of his principal, the authorities that are held by the agent are defined at statutory levels of the manner as prescribed by the principal. Basically, an agent is at large provided with various levels of statutory capacities/authorities by the principal to act in the contractual relationship. The various levels of the authorities provided include, actual authority, implied, virtuous, and ostensible/apparent authority. Implied authority is that which an agent holds by his/her virtue of reasonability of carrying out expressly his/her authority.

Therefore, this authority can only be inferred within his position (Gino, 2001, p. 101) Authority held by agent’s position implies the authority in which the agent has an inherent power of deterring business frauds held in his capacity for those persons that deal with the agent. The agent therefore has the power of instructing the prevention of any harm which would have hitherto occurred by the contractual relationships with a third party. For example, there is a binding authority between the different partners into a partnership which could expressly be through joint relationship.

Either, the executives in a corporation have the authority of decision-making on behalf of the shareholders through the positions they hold in the corporation. Ostensible/apparent authority is that which is created through the conduct/words of the principal that leads to creation of the position of third party reasonability that the principal authorized the agent in his actions. This would passively imply that the position of the agent has specified powers of agency which are known to the third party that such were mandated to the specifically appointed agent in a capacity of doing a specified contractual obligation.

Where an impression of authority is created by the principal though in reality no such actual authority was created, the third parties have a legal clause of protection as long as their actions are levied of reasonable functionality. This is the estoppels principle of agency which estoppels such a principal in any denial of authority grant in case of change in positions by third parties as a detriment alternative if they relied on such representations provided in the relationship (Gino, 2001, p. 123)

Actual authority is that which the conduct or words of the principal have a reasonable affirmation of causing the agent in a belief of actual authority of action by him/her. Actual authority may be through express terms that are provided in contractual form or even implied when that which is done or said provided reasonability of power assumption by the agent. When the principal’s authority to the agent is actual, all actions that fall within this authoritative scope is deemed as binding to the principal. The law of agency provides liabilities to both the agents, principals and the third parties to one another.

Presumably, the liability of the agent to the principal is the provision which seek to indemnify the principal over causal losses that he/he may have got from the misconduct and misrepresentation of the agent. The law provides that in cases where the agent acts without the actual authority of his principal and that the principal has no bound because of any affirmative apparent authority of the agent, the agent is then deemed of indemnifying his principal of any loss that could have occurred from the transaction.

To safeguard any possible thrones of liability, the agent is under fiduciary legal duties of professionalism to been loyal to his principal. He should therefore not accept any form of new obligations which are not consistent with what is provided by the principal. Elsewhere, he should abstain from making forms of unjustified and private profits from the relationship (Friedman, 1971, p. 145)


Friedman, G (1971) Law of Agency. New York, Butterworth & Company, p. 76, 145 Gino, E (2001) The Law of Agency. New York, Butterworth & Companyp. 101, 123 Law of Agency. Retrieved on 21st August from