What is the difference between express warranty of authority and implied warranty of authority?

• A. Express warranty asserts the agent has authority; implied warranty arises from the agency relationship; exceeding authority may bind or expose the agent to liability depending on circumstances.
• B. Express warranty arises from implied actions; implied warranty is written.
• C. Both warranties are identical in effect.
• D. Express warranty applies only to real property transactions.

Answer: (A)

In agency law, two forms of authority are talked about when a person acts as an agent: express and implied authority, and with them come two kinds of warranty about that authority. An express warranty of authority happens when the agent explicitly tells a third party that they have authority to act for the principal—think of a clear oral or written statement or a defined grant in a contract. It’s a direct assurance by the agent (or reflected in the explicit terms of the agency) that the agent can bind the principal in that transaction.

Implied warranty of authority, by contrast, arises from the very existence of the agency relationship and the agent’s conduct. Even without an explicit statement, there’s an implied promise that the agent has authority to act within the usual scope of the agency, and that the principal is willing to be bound in transactions the agent reasonably undertakes on the principal’s behalf. If the agent overreaches, the consequences differ: the principal may still be bound if the third party reasonably relied on apparent authority or the principal’s ratification, while the agent can be liable for acting without actual authority or for breaching the implied warranty.

Exceeding authority is central here. An express warranty makes the agent personally liable to the third party for misrepresenting their authority, and it can also expose the principal to liability if the scope of authority is within what was granted. The implied warranty covers authority inferred from the relationship and conduct, and it can create liability for the agent if they lack that implied authority, while the principal’s exposure depends on whether the recipient reasonably relied on apparent authority.

Other options miss the distinction: express authority is not something that arises from implied actions, and implied authority is not simply a written promise; the two are distinct in origin and effect, and they’re not identical or limited only to real property transactions.