Overview. Apparent authority is the power of an agent to act on behalf of a principal, even though not expressly or impliedly granted. … Typically, if an agent has apparent authority, the agent’s principal will be held liable for the actions of the agent which are within the scope of the apparent authority.
When you reasonably infer that a person is acting on the behalf of another person, there is apparent authority of that person. The apparent authority must be reasonable; in other words, anyone in your shoes would believe that the person has authority to act on behalf of another person.
Actual authority differs from apparent authority, though some may consider the differences minor. While actual authority requires a third party to have been officially granted the authority to act on behalf of a company, apparent authority does not require an official granting of power.
Apparent authority can legally be found, even if actual authority has not been given. There must be some act or some knowing omission on the part of the principal—if the agent alone acts to give the third party this false impression, then the principal is not bound.
Apparent agency will require three elements: 1) an act by the apparent agent or his principal justifying a belief that an agency relationship exists, 2) the principal has knowledge of the general circumstances, and 3) a third party is reasonably relying on his belief in the apparent agency relationship.
Apparent authority may be given by a company by providing an individual, who has no authority to make decisions or to contract, such items as business cards or stationery, business forms with the company’s logo, or a company truck with a logo.
‘apparent authority is created by a representation, made by the principal to the third party, that the agent has authority to enter on behalf of the principal into a contract of a kind within the scope of the “apparent” authority, [rendering] the principal liable to perform any obligations imposed upon him.
Apparent authority of an agent can also be terminated by the principal. This can be done by expressly communicating to a third party that an agent can no longer act on behalf of the company. Sometimes terminating an agent’s actual authority is not enough.
There are essentially three kinds of authority recognized in the law: actual authority (whether express or implied), apparent authority, and ratified authority (explained here).
There are three different ways in which the insurer authorizes the agent to represent it.
- Express Authority. Express authority is the authority that an agent has in writing in the contract with the insurer that the agent represents. …
- Implied Authority. …
- Apparent Authority.
We consider three factors when evaluating apparent authority: “(1) the manifestations of the principal to the third party; (2) the third party’s reliance on the principal’s manifestations; and (3) the reasonableness of the third party’s interpretation of the principal’s manifestations and the reasonableness of the …
What is the basis of estoppel?
The basic concept of an estoppel is that where a person (A) has caused another (B) to act on the basis of a particular state of affairs, A is prevented from going back on the words or conduct which led B to act on that basis, if certain conditions are satisfied.
“The doctrine of apparent [agency] basically holds that one who employs an independent contractor to perform services for another which are accepted in the reasonable belief that the services are being rendered by the employer or its servants is subject to liability for physical harm caused by the negligence of the …