What occurs if an agent acts outside their authority?

When an agent acts outside their authority, the consequences largely hinge on the relationship between the agent's actions and the principal's ability to be liable for those actions. The correct answer indicates that the principal may not be held liable for the agent's unauthorized actions.

In agency law, a principal is generally bound by the acts of their agent only when those acts fall within the authority granted to the agent, whether that authority is express or implied. If an agent exceeds their authority, the principal is not required to honor the actions taken by the agent, as those actions were not authorized. Therefore, the principal can assert that they are not liable for any commitments or obligations made by the agent that were beyond the scope of their granted authority.

This reflects the fundamental principle of agency that the relationship is built upon the concept of authority—without authority, the agent cannot act on behalf of the principal in a legally binding way.