Which statement about express vs implied authority and warranties is correct?

• A. Express warranty asserts the agent has authority; implied warranty arises from the agency relationship; exceeding authority may bind or expose liability depending on circumstances.
• B. Express warranty asserts the agent has no authority; implied warranty arises from third-party contracts.
• C. Express warranty is only applicable in written agreements; implied warranty only in oral agreements.
• D. Express warranty and implied warranty have no overlap and are governed by different laws.

Answer: (A)

In agency law, the idea is that a principal can empower an agent to act on its behalf, and there are two ways a third party can be assured the agent has that power: an express warranty and an implied warranty of authority. An express warranty occurs when the agent explicitly asserts they have authority to act for the principal. An implied warranty arises from the existence of the agency relationship itself—the mere fact that the agent is acting in that role creates an expectation that the agent is authorized to handle the usual transactions within the scope of that relationship, even if no explicit promise is made. When an agent exceeds the authority they've been granted, the consequences depend on the situation: the principal may be bound if there is apparent authority or if the principal ratifies the act, but otherwise the agent can be liable to the third party for acting without proper authority. This combination—express claims of authority, plus authority inferred from the relationship and the surrounding circumstances—best fits how warranties about an agent’s power work and how liability can attach.

The other statements misstate the basic ideas: express warranty does not assert no authority; warranties about authority are not limited to third-party contracts or to a single form (they can arise in writing or orally, and there is overlap between express and implied warranties).