Apparent Authority; Law of Agency

March 27, 2023by Jeffrey Davis

Apparent authority refers to a situation where an agent or representative of an organization appears to have the authority to act on behalf of the organization, even if they do not have explicit authorization to do so.

This type of authority arises from the actions or words of the principal (the organization) rather than from any actual authority granted to the agent or representative. For example, if a manager of a company frequently allows an employee to make decisions or act on behalf of the company, even though the employee does not have formal authority, then the employee may be said to have apparent authority.

It is important to note that apparent authority is based on the reasonable beliefs of a third party, not the agent or principal themselves. This means that if a third party reasonably believes that the agent has authority based on the actions or words of the principal, then the principal may be held responsible for the actions of the agent, even if the agent did not have actual authority.