In general agency law, which statement is true about establishing an agency relationship?

• A. There is a presumption that one person acts for another.
• B. There must be some tangible evidence of an agency relationship.
• C. An agent's power to bind the principal may exceed the express authority.
• D. The agency relationship must be created by the principal.

Answer: (B)

Authority in agency relationships isn’t limited to what a principal explicitly grants. While express authority comes from a direct grant, agents can also have implied authority—the powers reasonably necessary to carry out their duties—and apparent authority—where the principal’s conduct leads a third party to believe the agent has authority. Because of these forms, an agent’s power to bind the principal can extend beyond the express terms. This is why the statement about the agent’s binding power exceeding express authority is true: contracts or actions can bind the principal even if not all details were spelled out in writing or spoken aloud. Agency can be established by express agreement, by the agent’s conduct implying authority, or by apparent authority created by the principal’s representations; it does not require tangible evidence in every case, and it need not be created solely by the principal. Understanding the roles of implied and apparent authority clarifies how an agent can bind a principal beyond what is expressly authorized.