What are the limits of an agent's authority?

The limits of an agent's authority are primarily determined by the agency agreement, applicable laws, and the nature of the task they are assigned. This foundation establishes a clear framework for what an agent is permitted to do on behalf of the principal.

The agency agreement explicitly outlines the scope of authority granted to the agent, detailing the duties and responsibilities expected from them. Additionally, applicable laws regulate agency relationships and may stipulate certain limitations on the authority granted to protect the interests of the principal and third parties.

The nature of the task also plays a crucial role; for example, an agent tasked with negotiating a real estate sale has different authority compared to one hired for marketing purposes, which further clarifies their limits in decision-making and actions.

The other options do not comprehensively define the limits of authority. Personal knowledge and expertise may enhance an agent's effectiveness but do not establish formal boundaries. Client preferences, while important, are not the sole determinants of authority limits and can be overruled by the agency agreement or the law. Finally, relying solely on verbal agreements creates ambiguity and is typically not sufficient for establishing an agent's authority in formal agency relationships.