What might a principal include in an agency agreement to restrict an agent's authority?

In an agency agreement, a principal can include specific limitations on the decisions that the agent is authorized to make as a way to restrict the agent's authority. This is essential for ensuring that the agent does not take actions that could harm the principal’s interests or go beyond what the principal is willing to allow. For example, the principal may specify that the agent cannot enter into contracts over a certain monetary value or cannot make decisions related to certain aspects of the business without prior approval from the principal.

Incorporating these specific limitations clarifies the boundaries of the agent’s authority, thereby protecting the principal from unauthorized actions that could lead to liability or financial loss. By doing so, the principal maintains greater control over significant decisions, which is crucial in the agency relationship.