What Is an Actual Authority?

An actual authority is a party who is authorized to act as an agent on behalf of another because of implicitly or explicitly delegated authority. This person can make decisions for the principal under the law. The term “express authority” may also be used in some settings, depending on regional terminology and preference. Decisions made by this party are legally binding and can be enforced in a court of law.

Ideally, an actual authority has written explicit authority from the principal, as this is the most secure kind of legal documentation to base legal power upon. For instance, a supervisor could give a sales clerk written permission to discount sales prices in the event of a customer complaint. The clerk is an actual authority empowered to make discounts to satisfy customers. If an employer later takes the matter to court and claims the clerk acted outside the scope of authority, the court can rule that based on the documentation, the clerk was not out of line.

In implicit authority, specific authority is not delegated, but is implied by the nature of a contract or agreement because it is necessary to perform a task. In this example, a supervisor might indicate that clerks can act reasonably to resolve customer complaints as quickly as possible. While a clerk has not been given express permission to offer a discount, the clerk may decide to do so because this could be the most expeditious resolution to a complaint.

It is possible to act as an actual authority with oral permission, although this can be a problem if the activities of an agent are later challenged in court. If a person grants oral permission to an agent, it can be a good idea to follow up with written confirmation for the agent's records. In the event of a dispute, this document provides evidence that both parties understood the scope and limitations of authority. Otherwise, a case can become one that relies heavily on witness testimony, and witnesses are not always reliable.

If there is any question about whether a representative is an actual authority, people can ask for confirmation. This might include something like a warrant card or employee identification to assure a party to a discussion that the agent is representing a third party accurately. Likewise, attorneys and people acting as agents like health care proxies may carry copies of the legal documents that delegate authority. These documents serve as proof that someone is dealing with an actual authority who is legally allowed to make decisions in a matter.