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 Mississippi, the principal-agent relationship is governed by common law principles as well as specific state statutes. The principal grants the agent authority to act on their behalf, which can include entering into contracts and incurring other legal obligations within the scope of the agency. An agent's authority to bind the principal comes in two forms: actual authority and apparent authority. Actual authority is explicitly given by the principal to the agent, either in writing or verbally, to perform certain acts. Apparent authority, on the other hand, arises when a third party reasonably believes the agent has the authority to act, based on the principal's representations or conduct (such as allowing the agent to act in a certain role without objection). This can include situations where the principal knowingly permits the agent to exercise authority or where the principal's actions lead others to believe that the agent has such authority. In Mississippi, if an agent acts within the scope of their actual or apparent authority, the principal is typically bound by the agent's actions.