What action might a principal take if an agent acts beyond their authority?

When an agent acts beyond their authority, the principal has the option to terminate the agency relationship. This is a critical response because agents are expected to operate within the bounds of authority granted to them by the principal. If an agent exceeds that authority, it can lead to legal and financial repercussions for the principal, as well as damage to their reputation.

By terminating the agency relationship, the principal not only protects themselves from potential liability for the agent's unauthorized actions but also sends a clear message that unauthorized actions are unacceptable. This termination ends any responsibilities or liabilities that the principal might have toward the agent concerning the unauthorized acts.

While some other actions, such as providing a formal warning or funding additional training, might be considered in different circumstances, they wouldn’t be as decisive or protective in situations where an agent has already acted outside their authority. Ignoring the actions isn’t a viable option as it could lead to further issues and complications. Therefore, termination is often the most appropriate step to safeguard the principal's interests and ensure proper agency conduct in the future.