Final answer:
An individual is authorized to act on behalf of another person or company through the law of agency, which allows agents to perform acts and enter contracts on behalf of the principals, supporting business transactions and economic growth.
Step-by-step explanation:
The arrangement where an individual is authorized to act on behalf of another person or company is established through the law of agency. This law allows individuals to appoint agents who can perform acts and enter into contracts on their behalf as if they were the principals themselves.
In the context of contractual and property rights, this principle ensures that an individual or a company can expand their legal capacity to transact business or manage affairs, even when they are not physically present or wish someone with specific expertise to act for them.
The law of agency is a fundamental concept in business and legal transactions, which helps streamline the process of representation and authorization in myriad contractual scenarios. It forms the legal basis for situations like a skilled surgeon expecting payment for their services, highlighting the importance of enforceable contracts that support economic growth by allowing risk mitigation in business exchanges.