An agent's power to act on behalf of a principal, even though not expressly or impliedly granted. This power arises only if a third party reasonably infers, from the principal's conduct, that the principal granted such power to the agent. The idea of apparent authority protects third parties who would otherwise incur losses if the agent's signature did not bind the principal after reasonable observers thought that it would.
See Express authority, Actual authority, Implied authority, and Inherent authority.
Definition from Nolo’s Plain-English Law Dictionary
The condition that arises if a third party believes that an agent has the authority to act for another person or company (called the principal) when that authority has not in reality been granted. If an agent acts with apparent authority, the agent's acts legally bind the principal. For example, a customer may believe that an employee who presents a contract on company stationery is authorized to sign that contract on behalf of the company. Even if the employee does not have the authority to enter into contracts, the company will be legally bound by the signed agreement.
Definition provided by Nolo’s Plain-English Law Dictionary.
August 19, 2010, 5:11 pm