Implied Authority of Contract - Definition

Implied Authority of Contract is a legal term.

When a person is wearing a uniform or nametag bearing the logo or trademark of a business or organization; or if that person is functioning (in an obviously authorized capacity) on behalf of a business or organization, that person carries the Implied Authority of Contract.

For example, if you are at a resteraunt and your waitress tells you that she can give you a free beverage if you pay for an entree, she has made a contract with you on behalf of the business by which she is employeed. It is implied that she is given the authority to do so by the fact that she is the sole employee of the business who has been designated to complete a transaction with you. (Whether or not other employees ultimately get involved in your transaction is irrelevant, because it is expected that ideally she is the only person required to complete your business.)

Continuing the scenario, suppose that a manager were to come to your table and inform you that your waitress has made a mistake; that the "free beverage w/ paid entree" offer has expired and that you will be expected to pay for your beverage. At this point the business is in direct violation of a legally enforceable contract made between you, the client, and their employee. They are more than welcome to penalize the employee for the mistake, but they are legally obligated to honor the terms of the agreement made because of Implied Authority of Contract. (Obviously the same principle carries over into more extreme legal situations.)