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 South Carolina, as in other states, the principal-agent relationship is governed by common law principles and state statutes that define the extent of authority an agent has to act on behalf of a principal. An agent with 'actual authority' has been explicitly granted the power to make decisions and enter into agreements that legally bind the principal. This authority can be given either in writing or verbally. 'Apparent authority', on the other hand, arises when a third party reasonably believes, based on the principal's conduct, that the agent has the authority to act, even if such authority has not been explicitly granted. This can occur if the principal's actions or inactions suggest that the agent's actions are endorsed, such as by allowing the agent to act in a certain capacity without objection. In South Carolina, if an agent acts within the scope of their actual or apparent authority, the principal is typically bound by the agent's actions. However, if an agent exceeds their authority, the principal may not be held liable for the agent's unauthorized acts unless the principal ratifies those acts or was negligent in supervising the agent or in communicating the limits of the agent's authority.