In a principal-agent relationship, the principal gives the agent authority to act on behalf of the principal, and to bind or obligate the principal to contracts and other legal obligations, as permitted by the scope of the agency (authority). An agent’s authority may be sufficient to bind or obligate the principal if the authority was expressly given to the agent (actual authority), or if it was implied to other persons that the agent had authority to act on behalf of the principal (apparent authority)—such as by the principal’s adoption of the agent’s prior actions on behalf of the principal.

In Virginia, the principal-agent relationship is governed by common law principles as well as specific statutes that may apply to certain types of agency relationships. The principal gives the agent authority to act on their behalf, which can be actual authority, explicitly granted by the principal, or apparent authority, where the principal's conduct suggests to third parties that the agent is authorized to act. Actual authority is the direct power the agent is given by the principal to conduct transactions or make decisions, and it can be either express or implied based on the principal's instructions or the nature of the agency. Apparent authority, on the other hand, arises when a principal's actions lead a third party to reasonably believe that the agent has the authority to act, even if the agent does not have actual authority. This can occur through the principal's representations or by allowing the agent to act in a way that suggests such authority. In Virginia, if an agent acts within the scope of their actual or apparent authority, the principal is typically bound by the agent's actions and can be obligated to contracts and other legal responsibilities as a result.