Inherent authority refers to an agent's power to act on behalf of a principal, even though that power has not been specifically or implicitly granted by the principal. This type of authority arises only in situations where it is necessary for the agent to fulfill the actual authority that has been granted by the principal.
For example, if a principal gives an agent the authority to sell a property, and the successful sale of the property requires the agent to sign a contract, then the agent has inherent authority to sign the contract on behalf of the principal. This type of authority is recognized as a necessary aspect of carrying out the principal's instructions and is only exercised within the limits of the actual authority granted by the principal.
See also: Express authority, Actual authority, Implied authority, and Apparent authority.
[Last updated in February of 2023 by the Wex Definitions Team]