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

In agency law, "actual authority" refers to the power that an agent has to act on behalf of a principal, which is explicitly or implicitly granted by the principal. This means that actual authority arises from the principal's clear communication to the agent about what actions the agent is permitted to take. This can include written or verbal instructions where the principal delineates the specific powers or responsibilities of the agent.

When actual authority is granted explicitly, it usually involves a direct communication, such as a contract or a straightforward discussion where the principal details the scope of the agent's powers. Implicit authority, on the other hand, may not be articulated directly but is inferred from the agent's role or the context of the situation. For example, if a company hires a manager to run its daily operations, the manager may have implicit authority to make decisions necessary for the effective management of the business.

The other concepts presented in the options do not accurately describe actual authority. Perceived authority relates to what third parties believe the agent can do, often without formal agreement from the principal. Authority based on previous transactions could involve an agent's customary practices but does not reflect actual authority granted for the current situation. Lastly, authority determined by court order is not a fundamental aspect of agency