Implied authority refers to which of the following?

• A. Powers given to the agent as part of the agency agreement
• B. Powers NOT given by the agency agreement, but necessary to complete the functions allowed in the agency agreement
• C. Powers NOT given by the agency agreement, but that a reasonable person would presume the agent has
• D. Powers authorized by the agency contract in writing

Answer: (B)

Implied authority is the power that an agent reasonably needs to carry out the duties the principal has authorized, even though it isn’t written in the contract. The best choice captures this idea: powers not spelled out in the agency agreement but necessary to complete the functions the agent is allowed to perform. This lets the agent do what’s needed to finish a transaction, such as gathering information, handling routine steps, or taking actions that are customary to fulfill the agency’s purpose, without requiring explicit written permission for every tiny step.

This differs from express authority, which is the explicit powers stated in the contract or given directly by the principal in writing or verbally. It also differs from apparent authority, which depends on how a third party perceives the agent’s authority based on the principal’s representations, not on what’s actually granted to the agent.