Actual Authority

AAA

DEFINITION of 'Actual Authority'

Specific powers, expressly conferred by a principal (often an insurance company) to an agent to act on the principal's behalf. This power may be broad, general power or it may be limited, special power.

Also known as "express authority."

INVESTOPEDIA EXPLAINS 'Actual Authority'

Actual authority arises where the principal's words or conduct rationally cause the agent to believe that he or she has been empowered to act. An agent receives actual authority either orally or in writing. Written authority is preferable, as it is somewhat difficult to establish authority that is given verbally. In a corporation, written express authority includes bylaws and resolutions from directors' meetings which grant the authorized person permission to carry out a definite act on behalf of the corporation.

RELATED TERMS
  1. Agent

    1. An individual or firm that places securities transactions ...
  2. Proxy

    1. An agent legally authorized to act on behalf of another party. ...
  3. Principal

    1. The amount borrowed or the amount still owed on a loan, separate ...
  4. Attorney In Fact

    A person who is authorized to perform business-related transactions ...
  5. Letter Of Guarantee

    1. A type of contract issued by a bank on behalf of a customer ...
  6. Lloyd's Of London

    A British insurance market where members join hands as syndicates ...
Related Articles
  1. Proxy Voting Gives Fund Shareholders ...
    Mutual Funds & ETFs

    Proxy Voting Gives Fund Shareholders ...

  2. Three Documents You Shouldn't Do Without ...
    Options & Futures

    Three Documents You Shouldn't Do Without ...

  3. Your Will: Why You Need A Power Of Attorney ...
    Options & Futures

    Your Will: Why You Need A Power Of Attorney ...

  4. Letter Of Instruction - Don't Leave ...
    Retirement

    Letter Of Instruction - Don't Leave ...

comments powered by Disqus
Hot Definitions
  1. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  2. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  3. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  4. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  5. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
  6. Limit-On-Open Order - LOO

    A type of limit order to buy or sell shares at the market open if the market price meets the limit condition. This type of ...
Trading Center