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 West Virginia, 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. The principal gives the agent authority to act on their behalf, which can be actual authority, explicitly granted by the principal, or apparent authority, where the principal's conduct suggests to third parties that the agent is authorized to act. Actual authority is the direct power the agent is given by the principal to conduct transactions or make decisions, whereas apparent authority arises when a principal's actions lead others to reasonably believe that the agent has the authority to act, even if such authority was not explicitly granted. If an agent acts within the scope of their actual or apparent authority, they can bind the principal to contracts and other legal obligations. It's important for both principals and agents to understand the extent of the agent's authority to avoid unintended legal consequences. In cases of dispute, an attorney can help clarify the scope of authority and the binding nature of the agent's actions.