What is meant by "actual authority" in agency law?

In the context of agency law, "actual authority" refers specifically to the power that an agent has been expressly granted by the principal, often through explicit agreement or a written contract. This type of authority is clear and direct, meaning the principal has communicated to the agent what powers they possess, allowing them to act on the principal's behalf.

This concept is fundamental for understanding the relationship between a principal and an agent. When an agent has actual authority, they can engage in actions and make decisions that are legally binding for the principal, as long as those actions fall within the scope of the authority granted. This explicit agreement may outline specific tasks, responsibilities, and limits on the agent's actions, ensuring that there is a mutual understanding of the agent's role.

While the other forms of authority mentioned, such as implied authority or authority derived from corporate policies, can influence an agent's power, they do not encompass the precise nature of actual authority, which relies solely on what has been formally specified by the principal.