Texas Real Estate Brokerage Sales Apprentice Education (SAE) Practice Exam

What type of authority does a licensed agent have when authorized by the principal to act in a specific way?

1. Apparent Authority

2. Express Authority

3. Actual Authority

4. Implied Authority

The correct answer is: Actual Authority

When a licensed agent is authorized by the principal to act in a specific manner, the concept that best describes this relationship is actual authority. Actual authority refers to the power that has been expressly granted to the agent by the principal, whether through a written agreement or verbal communication. This authority is grounded in the principal's unequivocal intention for the agent to perform certain tasks or functions, making it clear and legally binding. In this scenario, when an agent operates within the limits set by the principal, any actions taken are considered to be within the agent's actual authority, thereby creating a direct link between the principal's directives and the agent's actions. The principal is held accountable for the agent's actions as long as they fall under that granted authority, thereby reinforcing the trust and responsibility inherent in the agency relationship.