Actual authority refers to the legal power or permission given to an agent or representative to act on behalf of the organization. It is the explicit permission or authorization granted by the principal (the organization) to the agent or representative to act on their behalf.

Actual authority can be either express or implied. Express authority is explicitly granted through a contract or agreement, while implied authority is not explicitly granted but is implied based on the nature of the agent’s position or the circumstances of the situation.

For example, a salesperson in a retail store may have express authority to make sales, while an implied authority to make decisions about customer service issues, such as offering a refund or exchange, based on the nature of their position.

It is important for principals to clearly define the scope of an agent’s actual authority to avoid any misunderstandings or legal issues. Any actions taken by an agent beyond the scope of their actual authority may not be legally binding on the principal.