Future Business Leaders of America (FBLA) Business Law Practice Exam

What type of authority comes from explicit orders given by a principal to an agent?

1. Implied authority

2. Express authority

3. Inherent authority

4. Apparent authority

The correct answer is: Express authority

The correct response identifies express authority, which is established when a principal directly communicates specific instructions or orders to an agent. This relationship is clearly defined, as express authority is articulated in clear terms, typically through verbal or written communication. This type of authority empowers the agent to act on behalf of the principal in the manner described by those explicit directives. In contrast, implied authority refers to the authority that is not explicitly stated but is necessary for the agent to perform their duties. It arises from the position the agent holds or the circumstances surrounding the engagement. Inherent authority pertains to the power automatically assumed by an agent based on their role, even without direct instructions. Apparent authority involves situations where a third party reasonably believes an agent has the authority to act on the principal's behalf, even if the principal has not explicitly granted this authority. These distinctions clarify why express authority is recognized as the correct answer in this context.