Legal Definitions - inherent authority

Definition: Inherent authority refers to an agent's power to act on behalf of a principal, even though that power has not been specifically or implicitly granted by the principal. This type of authority arises only in situations where it is necessary for the agent to fulfill the actual authority that has been granted by the principal.

For example, if a principal gives an agent the authority to sell a property, and the successful sale of the property requires the agent to sign a contract, then the agent has inherent authority to sign the contract on behalf of the principal. This type of authority is recognized as a necessary aspect of carrying out the principal's instructions and is only exercised within the limits of the actual authority granted by the principal.

Example: A company hires a manager to oversee the day-to-day operations of the business. The manager has the express authority to hire and fire employees, but the manager also has inherent authority to make decisions about how to run the business on a daily basis. This includes making decisions about inventory, scheduling, and customer service. The manager's inherent authority is necessary to carry out the express authority granted by the company.

Explanation: Inherent authority is necessary for an agent to carry out the express authority granted by the principal. In the example, the manager's inherent authority allows them to make decisions about the day-to-day operations of the business, which is necessary to carry out their express authority to hire and fire employees. The manager's inherent authority is limited to decisions that are necessary to fulfill their express authority and cannot be used to make decisions outside of their scope of authority.