(1) The principal's grant of authority to an agent may be express or implied.
(2) The agent has authority to perform all acts necessary in the circumstances to achieve the purposes for which the authority was granted.
1. Express or implied grant of authority
Paragraph (1) makes it clear that the granting of authority to the agent by the principal is not subject to any particular requirement of form and that it may be either express or implied.
The most common case of express authority is a power of attorney, but the principal may also confer authority on the agent in an oral statement or written communication or, in the case of a corporate entity, in a resolution by its board of directors. The granting of express authority in writing has the obvious advantage of providing clear evidence of the existence and precise scope of the agent’s authority to all parties concerned (principal, agent and third parties).
An implied authority exists whenever the principal’s intention to confer authority on an agent can be inferred from the principal’s conduct (e.g. the assigning of a particular task to the agent) or other circumstances of the case (e.g. the terms of the express authorisation, a particular course of dealing between the two parties or a general trade usage).
1. B appoints A as Manager of B’s apartment building. A has implied authority to conclude short term lease contracts relating to the individual apartments.
2. Scope of the authority
The broader the mandate conferred on the agent, the broader the scope of its authority. Accordingly, paragraph (2) makes it clear that the agent’s authority, unless otherwise provided by the principal in its authorisation, is not limited to its express terms, but extends to all acts necessary in the circumstances to achieve the purposes for which the authority was granted.
2. Owner B consigns to shipmaster A a cargo to be carried to country X within 10 days. With only three days of navigation left, the ship is damaged and must stop in the nearest port for repairs. A has implied authority to unload the cargo and consign it to another shipmaster to be carried to destination on another ship.