Judicial principles and studies
Administrative Delegation: Acts Beyond Authority and Apparent Agency
General rule: a principal company is not bound by contracts made by its delegate outside the scope of authority and without consent, unless the third party proves an external appearance that justified believing in representation.
Updated: 10 September 2026
Prepared and reviewed by: Ashraf Al-Khawaja
Subject
A delegate company concluded a contract with a third party beyond its delegated authority and without the principal company's consent; the issue is whether the contract binds the principal.
Summary
- When a delegate contracts with a third party outside the scope of its authority and without the principal's approval, the principal is not bound by that contract. - Such a contract is not evidence against the principal and does not make the principal a party by origin or agency unless the principal authorized the act at the time of its conclusion. - A third party cannot rely solely on a claim of good faith to bind the principal; it must prove an external appearance that led it to believe the delegate acted on the principal's behalf and that it had sufficient knowledge of the delegate's status when contracting. - This is an educational summary and not a judicial text or legal advice.
Practical significance
- Third parties should verify the delegate's authority and be able to demonstrate any outward appearance of representation if they wish to rely on it. - Principals should clearly define delegation limits and notify relevant parties to avoid unintended obligations. - Delegates must respect the limits of their authority and inform counterparties of any restriction or change. - This is an educational summary and not a judicial text or legal advice.
Sources and references
Verify the official text and latest amendments before relying on this material professionally.