Which term refers to the power to bind a party to a contract on behalf of the party?

Which term refers to the power to bind a party to a contract on behalf of the party?

• A. Capacity
• B. Willingness
• C. Authority
• D. Offer

Answer: (C)

Authority is the power granted to an agent to bind the principal to contracts on the principal’s behalf. This power can be express (clearly delegated) or implied (arising from the role or past practice), and it can also appear to a third party as apparent authority if the principal’s conduct leads them to believe the agent is authorized. When someone acts within their authority, the contract they negotiate or sign binds the party they represent. If they act without authority and there’s no ratification, the principal may not be bound. Capacity is the general legal ability to enter contracts, not the binding power granted to an agent; willingness is a person’s readiness to contract; an offer is just a proposal to contract, not the power to bind.

Authority is the power granted to an agent to bind the principal to contracts on the principal’s behalf. This power can be express (clearly delegated) or implied (arising from the role or past practice), and it can also appear to a third party as apparent authority if the principal’s conduct leads them to believe the agent is authorized. When someone acts within their authority, the contract they negotiate or sign binds the party they represent. If they act without authority and there’s no ratification, the principal may not be bound. Capacity is the general legal ability to enter contracts, not the binding power granted to an agent; willingness is a person’s readiness to contract; an offer is just a proposal to contract, not the power to bind.