What is agent's authority?

Agent's authority refers to the legal power granted by a principal (the person or entity appointing the agent) to the agent to act on the principal’s behalf in dealings with third parties. This encompasses the ability to negotiate contracts and make decisions that can legally bind the principal, provided the agent acts within the scope of that authority.

When agents operate within their authority, any contract they execute is enforceable against the principal. This aspect emphasizes the relationship of trust and delegation between the principal and the agent. It enhances business efficiency by allowing the agent to act quickly in the principal's interest, as long as they remain within the confines of the authority granted.

In contrast, the other options reflect either incomplete concepts or limitations that do not encompass the broad definition of an agent's authority. For example, while authority granted by the principal to negotiate contracts is related to the agent's role, it does not capture the entirety of agent's authority, which also includes executing contracts and representing the principal in various dealings. Determining an agent's income does not pertain to authority itself, and the notion that authority is limited to verbal agreements is incorrect, as authority can also be established through written agreements or implied by conduct.