What does "authority of an agent" refer to?

The concept of "authority of an agent" primarily refers to the power granted to an agent to act on behalf of a principal. This authority allows the agent to engage in specific transactions and make decisions that bind the principal legally. The agent's authority can come in various forms, including actual authority (express or implied) and apparent authority, which provides a framework within which the agent operates.

Understanding this definition is crucial because it distinguishes the role of the agent and the legal responsibilities that arise when an agent acts within their authority. When an agent operates within the scope of their authority, the principal is legally bound by the agent's actions, ensuring that the principal's interests are represented and protected effectively.

The other options touch on different aspects of agency but do not accurately capture the core definition of the authority of an agent. For example, while negotiating contracts is a potential function of the agent, it does not encompass the broader concept of authority. Similarly, limitations on actions and the privilege to delegate authority pertain to the boundaries and delegation rights of an agent rather than the foundational idea of the authority itself.