What does implied authority refer to?

Implied authority refers to the power that an agent has to perform actions that are not explicitly stated but are necessary or customary to carry out the express authority given to them by the principal. This type of authority fills in the gaps of what an agent may legitimately need to do in the pursuit of their designated tasks, ensuring smooth and effective operations without needing to constantly seek additional approval for each step.

In practical terms, if a principal gives an agent the authority to manage a restaurant, the agent may implicitly have the authority to hire staff, order supplies, or make menu changes—all actions that support the principal's express goal of running the restaurant efficiently. This reasoning demonstrates how implied authority is essential in ensuring that agents can operate effectively within the scope of their assigned responsibilities. Thus, it is associated with actions that naturally flow from the tasks explicitly assigned to the agent, as opposed to being directly communicated.

Understanding this concept is critical in business and agency contexts, as it safeguards both the agent's ability to act and the principal's interests, especially in situations where quick decisions must be made based on the expectations of the role.