What type of authority does a terms of business agreement [TOBA] create for an agent?

A terms of business agreement (TOBA) creates express authority for an agent. Express authority is clearly defined and explicitly granted by the principal to the agent through a formal agreement or contract. In the context of a TOBA, the specific rights, responsibilities, and limitations of the agent are detailed, allowing them to operate within a set framework as mandated by the principal.

This express authority enables agents to engage in specific actions or decisions on behalf of the principal, aligning with what has been pre-established in the agreement. Since a TOBA is a written document outlining the terms of the business relationship, it explicitly sets out the scope of the agent’s authority, making it inherently an expression of the principal’s intentions toward the agent’s role in transactions and operations.

Other concepts, like ostensible authority or implied authority, refer to situations where authority arises from the perceptions or assumptions of third parties or from circumstances not explicitly stated in an agreement, rather than from a clearly defined contract like a TOBA.