N.C.P.I.—Civil 516.05

NOTE WELL: This instruction applies when there is an

issue as to the authority of an agent to bind the

principal as to a particular matter. It should be used

only in those cases where the existence of some form

of agency has been established (either by stipulation,

admission or a finding of fact) but a question remains

as to the authority of the agent to bind the principal on

the particular matter.

This (state number) issue reads:

“Was (name agent) authorized to (describe act, e.g., contract for

the purchase of a building) on behalf of (name principal)?”1

The burden of proof on this issue is on the plaintiff. This means

that the plaintiff must prove that in (describe act) (name agent) was

acting within the scope of actual authority or apparent authority.

[It has been [stipulated] [admitted] [established] [agreed]] [If you

have answered the preceding (state number) issue “Yes”, it has been

established]2 that (describe stipulated or judicially admitted facts or

facts established from preceding issue in just enough detail to show an

agency; e.g., “John Jones was employed by the defendant as the general

manager of his furniture plant”).] In this situation the relationship

between (name agent) and (name principal) is called an “agency.” An

agency is a relationship where one person is empowered to take certain

action on behalf of the other person.3 In such situations the person

granting the authority to another to act on [his] [her] behalf is called the

“principal.” And the person who is authorized to act on behalf of such

principal is called the “agent.” When an agent acts on behalf of the

principal, then the principal is bound by such act, so long as the agent

has not exceeded [his] [her] authority. The act of the agent is treated in

law as the act of the principal. However, a principal is not bound by the

act of an agent unless that act falls within the scope of authority, actual

or apparent, granted by the principal to the agent.4 In order to determine

the authority of an agent, it is necessary to look to the conduct and

declarations of the principal. An agent may not extend [his] [her]

authority by [his] [her] own conduct standing alone and in the absence

of conduct or acquiescence on the part of the principal.

The authority of the agent to act with respect to a particular matter

may be actual, or it may be apparent.

“Actual authority” exists where the principal has actually authorized

the agent to act on the principal’s behalf with respect to a particular

matter. It is that authority which the agent reasonably thinks the agent

possesses, conferred either intentionally or by want of ordinary care by

the principal.5 It may be granted by the principal by word of mouth, or by

writing, or it may be implied by conduct of the principal amounting to

consent or acquiescence, or by the nature of the work that the principal

has entrusted to the agent.6

“Apparent authority,” on the other hand, is the authority which the

principal has held out the agent as possessing, or which the principal has

permitted the agent to hold [himself] [herself] out as possessing.7 The

scope of the agent’s apparent authority will be governed by what

authority the third person, in the exercise of reasonable care, was

justified in believing that the principal had conferred upon the agent.8 It

includes all authority that is usually conferred upon an agent employed to

transact the particular business. It includes the authority implied as

usual and necessary to the proper performance of the work entrusted to

the agent, and it may be further extended by reason of acts indicating

authority which the principal has permitted the agent to do in the course

of employment.9 When the agent acts on behalf of the principal and

within the scope of this apparent authority, the principal is bound even

though the principal may not have intended to authorize the specific acts

in question.10

However, the law of apparent authority applies only if the person

dealing with the agent, such as the plaintiff in this case, reasonably

relied upon the appearance of authority in the agent. Apparent authority

does not exist where the person dealing with the agent knows of a

limitation on the agent’s actual authority.11 It also does not exist if the

circumstances are such as would cause a person of reasonable business

prudence to make inquiry as to the agent’s authority. (And if a [contract]

[(describe other action)] is so clearly of an unusual or extraordinary

character as to put a person of reasonable business prudence on inquiry,

then the doctrine of apparent authority would not apply.)12 “Reasonable

business prudence” means that degree of care which a prudent person

gives to important business.13

Finally, I instruct you on this (state number) issue on which the

plaintiff has the burden of proof, that if you find by the greater weight of

the evidence14 either: (1) that (name principal), by (describe word, deed

or implication) granted (name agent) actual authority which included the

authority to (describe act); or (2) that (name principal) (describe

evidence of extending authority) and thereby held (name agent) out, or

permitted (name agent) to hold [himself] [herself] out, as possessing

authority which included the authority to (describe act) on behalf of

(name principal), and that the plaintiff reasonably relied upon this

appearance of authority in (describe act, e.g., “entering into the

contract”), then it would be your duty to answer this issue, “Yes,” in favor

of the plaintiff.

If, on the other hand, you fail to so find, then it would be your duty

to answer this issue, “No,” in favor of the defendant.