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 Louisiana, the principal-agent relationship is governed by the state's Civil Code, which recognizes the authority of an agent to act on behalf of a principal. The agent can bind the principal to contracts and other legal obligations within the scope of the agency. This authority can be 'actual authority,' explicitly granted by the principal to the agent, or 'apparent authority,' where the principal's conduct suggests to third parties that the agent is authorized to act. Apparent authority arises when a principal's actions lead others to reasonably believe that the agent is empowered to act on their behalf, even if the agent does not have explicit authority. This could occur, for example, if the principal knowingly allows the agent to act in a certain capacity and does not correct third parties' assumptions about the agent's authority. It's important to note that the specifics of these relationships can be complex and may vary depending on the circumstances, so consulting with an attorney for particular situations is advisable.