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 asserts the agent has authority; implied warranty arises from contract with third parties only.
• C. Express warranty is not enforceable against principals; implied warranty guarantees liability only for unauthorized acts.
• D. Express warranty and implied warranty are identical.

Answer: (A)

The key idea is how authority is promised or assumed in agency. An express warranty of authority is a direct, explicit claim by the agent that they have authority to act for the principal. If that claim is false, the agent can be liable to the third party for misrepresentation, and the principal may be bound only if actual authority exists or is later ratified.

An implied warranty of authority, by contrast, comes from the existence of the agency relationship itself. It means third parties are entitled to assume the agent has authority to act within the usual scope of the role, even if there was no specific statement promising authority. If the agent exceeds that authority, the principal may not be bound unless there is apparent authority or ratification by the principal, and the agent can be liable for acting beyond their authority.

So the correct choice captures that express authority is an explicit claim of power, while implied authority arises from the relationship and surrounding circumstances, with outcomes that depend on how the authority was exercised and relied upon.