In a principal-agent relationship, the principal gives the agent authority to act on behalf of the principal, and to bind or obligate the principal to contracts and other legal obligations, as permitted by the scope of the agency (authority). An agent’s authority may be sufficient to bind or obligate the principal if the authority was expressly given to the agent (actual authority), or if it was implied to other persons that the agent had authority to act on behalf of the principal (apparent authority)—such as by the principal’s adoption of the agent’s prior actions on behalf of the principal.

In Georgia, as in other states, the principal-agent relationship is governed by principles of agency law. The principal grants the agent the authority to act on their behalf within the scope of the agency. This authority can be actual authority, which is explicitly given to the agent by the principal, either in writing or verbally. Alternatively, the agent may have apparent authority, which arises when the principal's actions or communications suggest to third parties that the agent is authorized to act on the principal's behalf, even if such authority has not been explicitly granted. If an agent acts within the bounds of either actual or apparent authority, the agent can bind the principal to contracts and other legal obligations. Georgia law also recognizes the concept of ratification, where a principal adopts or accepts the acts of an agent that were originally undertaken without proper authority, thereby binding the principal to those actions. It is important for principals to clearly define the scope of an agent's authority and for third parties to verify the extent of an agent's authority to avoid disputes regarding the binding nature of the agent's actions.