What is the consequence of an agent exceeding their authority?

When an agent exceeds their authority, the principal may not be bound by the agent's actions. This is because the authority granted to the agent by the principal defines the scope of what the agent can do on the principal's behalf. If the agent acts outside of this authority, those actions are typically considered unauthorized. As a result, the principal has the option to reject any contracts or obligations that the agent may have attempted to create. This principle is essential to maintaining the integrity of the agency relationship, as it protects principals from being held accountable for actions they did not authorize.

In this context, the other potential consequences mentioned do not automatically apply. While the agent may indeed face repercussions depending on the nature of the action taken, this does not guarantee legal penalties in every circumstance. Furthermore, it is not accurate to assert that the principal is always liable for the actions of the agent, particularly when the agent has overstepped their authority. Lastly, the agency relationship does not automatically terminate upon exceeding authority; it may continue, but the principal reserves the right to challenge the unauthorized actions.