Which term describes a relationship where one party can bind another by acting within the scope of authority?

Which term describes a relationship where one party can bind another by acting within the scope of authority?

• A. Agency
• B. Damages
• C. Affidavit
• D. Breach

Answer: (A)

Agency is the relationship where a principal authorizes an agent to act on the principal’s behalf. When the agent acts within the scope of that authority—whether express or implied—the principal is bound by the agent’s actions, just as if the principal had acted themselves. This is why the agent’s authority matters: it creates the legal power to bind the principal in contracts and other deals. If the agent stays within the granted authority, the binding effect stands; if the agent goes beyond it, the principal may not be bound unless there’s later ratification or some form of estoppel. Damages, affidavits, and breach describe different concepts (compensation for harm, a sworn statement, and failure to perform, respectively) and don’t define the relationship where one party can bind another through authority.

Agency is the relationship where a principal authorizes an agent to act on the principal’s behalf. When the agent acts within the scope of that authority—whether express or implied—the principal is bound by the agent’s actions, just as if the principal had acted themselves. This is why the agent’s authority matters: it creates the legal power to bind the principal in contracts and other deals. If the agent stays within the granted authority, the binding effect stands; if the agent goes beyond it, the principal may not be bound unless there’s later ratification or some form of estoppel. Damages, affidavits, and breach describe different concepts (compensation for harm, a sworn statement, and failure to perform, respectively) and don’t define the relationship where one party can bind another through authority.