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 Utah, as in other states, the principal-agent relationship is governed by common law principles of agency, which are also reflected in various statutes. The principal gives the agent authority to act on their behalf, which includes entering into contracts and incurring other legal obligations within the scope of the agency. An agent's authority to bind the principal can be actual authority, explicitly granted by the principal, or apparent authority, where the principal's conduct suggests to third parties that the agent is authorized to act. For example, if a principal knowingly allows an agent to act in a certain way over a period of time, the principal may be bound by the agent's actions, even if the specific act was not expressly authorized, due to the doctrine of apparent authority. Utah courts will look at the interactions between the principal, the agent, and the third party to determine if the agent had the authority to bind the principal. It's important for principals to clearly define and communicate the scope of an agent's authority to avoid unintended obligations.