Apparent Authority

Definition - What does Apparent Authority mean?

In agency law, apparent authority provides a cause of action to a party sustaining losses when the party has reasonably inferred that another party acts with the authority of the principal.

Apparent authority places a duty on the principal to make sure that only the principal’s actual agents act on the principal’s behalf.

Justipedia explains Apparent Authority

Apparent authority is often at issue in business, corporate, agency and contract law. Corporations, for example, may have thousands of employees. Internal policy may only grant certain employees the authority to represent the corporations in official business. Regardless, if a third party enters into an agreement with someone who appears to the third party to represent the principal, then the principal is still bound by the agreement that this apparent authority entered into. For this reason, businesses and corporations have a strong interest in ensuring that only delegated agents act on their behalf.

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