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Implied authority refers to the authority that an agent possesses even if it's not explicitly outlined in the agency contract. This type of authority is necessary for the agent to effectively perform the tasks and duties associated with their role. It is based on the actions and responsibilities typically associated with the agent's role, allowing them to make certain decisions and take necessary actions to fulfill their obligations to the principal.

For instance, if an agent is hired to sell a product, their implied authority may include negotiating prices and arranging payments, even if these specific tasks are not detailed in the contract. This allows the agent to act independently and make timely decisions that support the objectives of the principal.

Implied authority ensures that agents can operate efficiently without needing to seek prior approval for every minor decision, which would otherwise hinder productivity and responsiveness in business transactions. This concept is essential in agency law and highlights the practical functioning of agencies in the business environment.