What is a potential outcome of an agent acting beyond their authority?

When an agent acts beyond their authority, the principal may not be bound by the agent's actions. This principle is rooted in the concept of agency, where the authority of the agent is defined either explicitly through a contract or implicitly through the principal's conduct. If the agent exceeds this authority, the principal has the option to reject those actions, meaning they are not legally obligated to accept the consequences of the agent's overstep.

In situations where the agent acts outside of their given authority, the actions may not create binding obligations on the principal. This allows the principal to avoid liability for agreements or actions taken by the agent that were not authorized. If the principal later chooses to ratify the actions taken by the agent, they could bind themselves to those actions, but this is a voluntary choice and not an automatic outcome.

In contrast, if the principal were always held liable for any action taken by the agent, regardless of authority, it would undermine the essential nature of agency relationships. Similarly, the agent does not automatically assume no risk; in fact, acting beyond their authority can expose them to legal repercussions. Lastly, while an agent's actions outside their authority may lead to a reassessment of the agency relationship, there is not an automatic termination of the relationship