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 New Hampshire, as in other states, the principal-agent relationship is governed by common law principles of agency, which may be supplemented by state statutes in specific contexts. A principal can give an agent authority to act on their behalf and enter into contracts or legal obligations within the scope of the agency. This authority can be 'actual authority,' which is expressly granted by the principal to the agent, either in writing or verbally. Alternatively, an agent may have 'apparent authority,' which arises when a principal's actions or communications to third parties suggest that the agent is authorized to act, even if the principal has not explicitly given such authority. This can occur if the principal knowingly allows the agent to act in a certain way or fails to correct the impression that the agent has certain powers. In New Hampshire, if an agent acts within the scope of their actual or apparent authority, the principal is typically bound by the agent's actions. However, if an agent exceeds their authority, the principal may not be held liable for the agent's unauthorized acts unless the principal ratifies those acts or was negligent in supervising the agent or in communicating the extent of the agent's authority to third parties.