Actual Authority
Categories: Regulations, Ethics/Morals, Banking
Have you ever done something that seriously pissed off your boss because you had no right to do it? Like give away her morning coffee? Whoops.
If you did this in the business world (maybe not with coffee) in a legally offensive manner, you would have violated actual authority. Actual authority refers to who can do what with whom. As the Cornell Law School Legal Information Institute puts it, actual authority is “an agent's power to act on behalf of a principal, because such power was expressly or impliedly conferred.”
An example of this would be hiring an employee. You, as an agent acting on behalf of your company, have actual authority to hire an employee on behalf of your company if you have been given outright permission (express authority), or assume that you have been given permission (implied authority) to do so. If you haven’t been given authority, both you and your business could be in hot water if the hired employee sues.
