Which type of authority is NOT expressly stated in the contract but inferred by practice?

• A. Implied Authority
• B. Express Authority
• C. Special Authority
• D. Contractual Authority

Answer: (A)

Implied authority is the authority that isn’t written in the contract but is inferred from the agent’s role, duties, and the principal’s established business practices. It arises because the agent is expected to perform the tasks normally associated with their position and because the principal’s conduct leads others to rely on those actions as if they were authorized. In insurance contexts, this means a producer who routinely solicits applications, collects premiums, or issues receipts as part of their normal activities is typically assumed to have the authority to do those things, even if the contract doesn’t spell out every detail. Express authority, by contrast, is explicitly granted in writing or stated in the contract. Special authority refers to narrowly defined powers granted for a specific purpose and is also usually clearly stated. Contractual authority is a broad term that encompasses authority arising from the contract but not the particular idea of authority inferred by practice. Therefore, the type described—not expressly stated but inferred by practice—fits implied authority.