The explicit grant of power from a principal to an agent, authorizing the agent to perform specific acts, constitutes a critical element of agency law. This authorization is conveyed through direct language, either written or oral, leaving no ambiguity regarding the agent’s permissible actions. A clear example arises when a company president explicitly instructs a marketing director to approve advertising campaigns up to a certain monetary limit. This instruction provides the marketing director with the necessary authorization to commit the company’s resources within the specified parameters.
This type of authorization provides clarity and legal certainty in business relationships. By precisely defining the scope of an agent’s power, principals can maintain control over their affairs and minimize the risk of unauthorized actions. Its use clarifies responsibilities, reducing potential disputes between principal and agent, and between the agent and third parties. Historically, it served as a foundational principle in commercial transactions, underpinning trust and accountability in contractual agreements.