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 relationship. This authority can be actual authority, which is explicitly given to the agent by the principal, either in writing or verbally, to perform certain acts or conduct transactions. Alternatively, the agent may have apparent authority, which arises when a third party reasonably believes the agent has the authority to act on behalf of the principal, based on the principal's representations or conduct. If an agent acts within the scope of their actual or apparent authority, the principal is typically bound by the agent's actions. However, for the principal to be obligated by the agent's actions under apparent authority, the third party's belief in the agent's power must be traceable to the principal's manifestations and not the agent's own acts or representations. It's important for principals to clearly define the extent of an agent's authority and for third parties to verify the agent's authority to avoid disputes regarding the binding nature of the agent's actions.