In an agency relationship, what type of authority is exercised when the agent takes an alternative action based on circumstances not specified by the principal?

In an agency relationship, when an agent takes an alternative action based on circumstances not specifically outlined by the principal, this situation falls under implied power. Implied power refers to the authority that an agent possesses not because it was explicitly granted by the principal through a written or verbal agreement, but because it is necessary to fulfill the duties that the agent has been authorized to perform.

For instance, if a principal hires an agent to manage a business, the agent may need to make decisions about day-to-day operations that weren’t explicitly outlined in their agreement. This includes things like choosing suppliers or managing staff in ways aligned with the principal's broader goals, even if not explicitly approved beforehand. Implied power is inherently understood as part of the responsibilities of the agent, allowing them to act in good faith and to respond to situations as they arise.

In contrast, expressed power is when the principal explicitly states what the agent can and cannot do. Apparent power relates to the authority perceived by third parties based on the principal’s actions or representations, while actual power encompasses both expressed and implied powers as possessed by the agent. Understanding these distinctions is important for recognizing the dynamics and limitations of authority within agency relationships.