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Question

Difficulty: MediumAgent Authority and Agency Law

Producer Sophia is appointed by Horizon Casualty to sell personal auto insurance. Her written agency contract expressly authorizes her to solicit applications, collect initial premiums, and issue temporary binders of coverage. The contract makes no mention of whether she is authorized to schedule the mandatory physical vehicle inspections required by Horizon's underwriting department. However, Sophia regularly schedules these inspections on behalf of applicants to complete the application process. Which legal concept grants Sophia the power to schedule these inspections?

  1. Implied authorityAnswer
  2. B
    Apparent authority
  3. C
    Express authority
  4. D
    Estoppel

Answer

Implied authority
Implied authority is the unwritten authority that an agent is assumed to have in order to transact the business of insurance for the principal. Since Sophia is expressly authorized to solicit applications, the administrative task of scheduling the mandatory inspection is logically necessary to carry out that express duty, making it an implied power.

Step-by-Step Solution

1
Analyze the powers explicitly granted to the agent.
The contract grants express authority to solicit, collect premiums, and bind coverage.
Establishing the baseline of written (express) authority is necessary to determine if other actions are authorized.
2
Evaluate the unwritten action taken by the agent.
The agent schedules vehicle inspections, which is unwritten but necessary to finalize the applications she is expressly authorized to solicit.
Identifying the relationship between the unwritten action and the written duties reveals the nature of the authority.
3
Match the scenario to the correct legal definition.
Authority that is not explicitly written but is logically necessary to conduct the principal's business is defined as implied authority.
This distinguishes it from apparent authority (based on public perception) or express authority (written).

Key Concept

Implied Authority
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Topics

Agent Authority and Agency Law

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