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ACCA Applied Skills · Corporate and Business Law (Global) · Agency law

Hugo is appointed as agent by Selma by a document that is silent on how far his authority extends. Hugo is a manager responsible for running Selma's export business. Which of the following authority is Hugo most likely to have?

Hugo is most likely to have implied actual authority to do acts incidental to, or customary in, running the export business. Implied authority follows the nature of the role and trade custom, but does not extend to unusual transactions such as selling the premises.

  1. AAuthority to sell Selma's business premises
  2. BAuthority to do acts incidental to and customary in running the export businessCorrect
  3. CAuthority to appoint a replacement principal
  4. DAuthority to bind Selma to any contract whatever its nature

Explanation

Implied actual authority covers acts that are incidental to the agent's role or customary in that business. A manager of an export business would normally be able to make ordinary trading contracts. It does not stretch to disposing of the premises or to unlimited contracts.

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