In California, an agent’s authority to act on behalf of a principal is limited by both the scope of the authority granted and any restrictions placed by the principal. The authority can be either express (clearly outlined by the principal) or implied (inferred from the principal’s actions or the nature of the relationship), and it is essential that the agent stays within these boundaries when acting on behalf of the principal. If an agent exceeds their authority, the principal may not be bound by the agent’s actions unless the principal subsequently ratifies the contract or decision. For example, if an agent is authorized to negotiate a contract for a principal but goes beyond the agreed terms, the principal is not legally obligated to honor the contract unless they approve or confirm the agent’s actions.
Additionally, California law recognizes that an agent’s authority can be limited by the principal’s instructions or the nature of the transaction. If a principal places specific limitations on the agent’s actions (such as prohibiting the agent from entering into contracts above a certain value), these limitations must be communicated clearly to the agent. When an agent acts outside of these limits, the principal may not be bound by the agent’s unauthorized actions, and the agent may be personally liable to the third party for any resulting damages. Moreover, agents cannot act in ways that would violate the law or public policy, and any actions taken by the agent that involve illegal activities are automatically outside the scope of the agent’s authority.
