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 Oklahoma, the principal-agent relationship is governed by principles of agency law, 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. Actual authority is typically outlined in a contract or agreement between the principal and the agent. Apparent authority, on the other hand, does not require express authorization but can be established by the principal's conduct or by circumstances indicating that the agent is acting with the principal's endorsement. If a principal knowingly allows an agent to act in a certain way or fails to repudiate the agent's unauthorized actions, the principal may be bound by the agent's actions under the doctrine of apparent authority. It is important for principals to clearly define the scope of an agent's authority and for third parties to verify the extent of an agent's authority before entering into contracts.