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 Idaho, as in other states, the principal-agent relationship is governed by common law principles of agency, which dictate that a principal can authorize an agent to act on their behalf and enter into binding agreements. The agent's authority to bind the principal can be actual authority, which is explicitly granted by the principal to the agent, or apparent authority, which arises when the principal's behavior leads a third party to reasonably believe that the agent is authorized to act. For instance, 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 authority was not formally granted, due to the doctrine of apparent authority. Idaho courts will look at the interactions between the principal, the agent, and any third parties 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 prevent unauthorized commitments.