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Difficulty: EasyProducer Authority and Agency Law

An insurance agency contract explicitly grants a producer the right to solicit life insurance applications for an insurer. The written contract does not specifically mention that the producer can collect the initial premium from applicants. However, collecting this premium is a standard and necessary part of submitting a complete application. Under agency law, which type of authority allows the producer to collect the initial premium?

  1. Implied authorityAnswer
  2. B
    Express authority
  3. C
    Apparent authority
  4. D
    Authority by estoppel

Answer

Implied authority
The correct answer identifies that when a producer is granted express authority to perform a job (like soliciting applications), they are automatically granted the unwritten authority to perform standard, necessary tasks to complete that job (like collecting the initial premium). This is legally defined as implied authority.

Step-by-Step Solution

1
Identify the authority granted in the written contract.
The contract grants the express authority to solicit applications, but does not explicitly mention collecting premiums.
Establishing the baseline express authority is necessary to determine what other authority exists.
2
Analyze the relationship between the missing explicitly stated task and the granted task.
Collecting the initial premium is a standard and necessary action required to fulfill the express authority of soliciting applications.
This relationship defines the nature of the unwritten authority.
3
Determine the correct legal term for this type of unwritten, necessary authority.
The authority assumed for normal business operations to carry out express duties is known as implied authority.
This matches the legal definition under agency law.

Key Concept

Implied Authority in Agency Law
Estimated Time:45s
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Topics

Producer Authority and Agency Law

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