What is required for an agent to be reimbursed for expenses incurred on behalf of the principal?

For an agent to be reimbursed for expenses incurred on behalf of the principal, it is essential that there is an authorization to expend funds. This authorization may be outlined in the agency agreement or implied by the nature of the agent's duties.

When an agent is acting within the scope of their authority and incurs expenses that are considered reasonable and necessary for carrying out their responsibilities, the principal is generally obliged to reimburse those expenses. This obligation arises from the agency relationship, where the agent acts on behalf of the principal and the principal benefits from those actions.

The requirement of specific authorization for expenses ensures clarity and accountability, allowing the principal to control costs while still empowering the agent to perform necessary functions without the need for prior approval for every single expense. This balance facilitates effective operation within the agency structure.