In California, an agent has the legal ability to enter into contracts on behalf of a principal, provided they have been given the authority to do so. This authority can be either actual or apparent. Actual authority is granted through an agreement or instruction from the principal, either explicitly (express authority) or implicitly (implied authority), and it allows the agent to perform specific tasks or make decisions on the principal’s behalf. Apparent authority, on the other hand, arises when the principal’s actions lead a third party to reasonably believe the agent has the authority to act on their behalf, even if the principal has not directly granted such authority. If the agent acts within the scope of their authority, the principal is generally bound by the contract the agent enters into.
However, an agent’s actions are limited by the scope of the authority granted by the principal. If the agent exceeds their authority or acts beyond what the principal has allowed, the agent may be personally liable for the contract, and the principal may not be bound by the agreement unless they later ratify the agent’s actions. In California, contracts entered into by an agent on behalf of a principal are enforceable against the principal as long as the agent was acting within their scope of authority, whether the agent acted with express or implied authority, or even apparent authority. Additionally, if the agent acts without the principal’s consent or in violation of their instructions, third parties may also seek legal remedies directly against the agent for breach of contract.
