New court ruling on agent's authority

Can you be held responsible for something your agent promises, even if you 

did not actually give him or her express or implied authority? 

Yes, under the theory of apparent authority. 

This aspect of agency was discussed again in the Oregon Supreme Court 

case, Taylor v Ramsay-Gerding Construction Company, 345 Or ____ (filed November 

6, 2008)  The court stated that “When a principal explicitly authorizes the agent to 

perform certain acts, the agent has express authority.  However, most actual authority 

is implied:  a principal implicitly permits the agent to do those things that are 

‘reasonably necessary’ for carrying out the agent's express authority...In contrast, a 

principal also may be bound by actions taken that are "completely outside" of the 

agent's actual authority, if the principal allows the agent to appear to have the authority to bind the principal.  Such a circumstance is called "apparent authority. For a principal to be bound by an agent's action, the principal must take some affirmative 

step, either to grant the agent authority or to create the appearance of authority.  An 

agent's actions, standing alone and without some action by the principal, cannot 

create authority to bind the principal.” 

In other words, if an agent is held out by the principal to be the person in 

charge, the principal can be held to whatever that agent promises, even though it may 

not be authorized.  This reminds one of a bona fide purchaser for value, or the attorney in a power of attorney:  A third party often has a right to rely on how things appear on.  If they are not so, they are not made to accept the loss.