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Difficulty: EasyProducer Authority and Agency Law

An insurance producer's written agency contract authorizes them to solicit life insurance applications on behalf of an insurer. Although the contract does not explicitly state that the producer can contact applicants to schedule required medical examinations, the producer regularly performs this task to facilitate the underwriting process. Under the principles of agency law, which type of authority permits the producer to carry out this necessary, unwritten business activity?

  1. A
    Express authority
  2. B
    Apparent authority
  3. Implied authorityAnswer
  4. D
    Waiver of right

Answer

Implied authority
The correct answer identifies that tasks not explicitly written in an agency contract, but which are standard, necessary, and incidental to carrying out the written duties, fall under implied authority.

Step-by-Step Solution

1
Identify the primary source of the producer's power.
The producer has a written contract granting authority to solicit applications.
This establishes the foundation of express authority.
2
Analyze the specific action in question.
The producer is scheduling medical exams, which is not written in the contract but is required to complete the authorized task of soliciting applications.
Determines whether the action is explicitly stated, logically assumed, or publicly perceived.
3
Match the action to the correct legal definition.
Unwritten authority that is necessary to perform written duties is defined as implied authority.
Agency law dictates that agents have the implied power to perform standard business tasks necessary to fulfill their express contractual duties.

Key Concept

Types of Agent Authority
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Topics

Producer Authority and Agency Law

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