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Simple English definitions for legal terms
apparent authority
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A quick definition of apparent authority:
Apparent authority is when someone seems to have the power to act on behalf of someone else, even if they were not given that power directly. This happens when the person watching thinks that the other person has the power to act on behalf of someone else because of their actions. This helps protect people who might get hurt if the person who seemed to have the power to act on behalf of someone else did not actually have that power. If someone has apparent authority, the person they are acting for will be responsible for what they do. This is important in agency law, which is the law that deals with how people can act on behalf of others. Sometimes, people have apparent authority just because of the position they are in, like a manager or treasurer. Even if the person they are acting for has put limits on what they can do, if those limits are not known, the person with apparent authority can still act as if they have the power to do those things.
A more thorough explanation:
Apparent authority is when an agent has the power to act on behalf of a principal, even if that power was not explicitly or implicitly granted. This power arises when a third party reasonably infers, from the principal's conduct, that the principal granted such power to the agent. This 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. 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.
One example of apparent authority is the "power of position." This refers to apparent authority that is created by appointing someone to a position which carries recognized duties, such as a manager or treasurer. In this situation, there will be apparent authority to do the things which are regularly and typically entrusted and expected of someone with the position title. For example, in Pasquarella v. 1525 William St., LLC, the manager of a company had the apparent authority to bind the company to contracts, regardless of whether he had actual authority.
Another example of apparent authority is when a principal places limitations on the agent's abilities, but these limitations are not known to a third party. In this case, the agent will still have the apparent authority to do those things. For instance, if a principal tells an agent that they can only sign contracts up to a certain amount, but the agent signs a contract for a higher amount without the third party's knowledge of the limitation, the principal will still be held liable for the contract.
Overall, apparent authority is an important concept in agency law that protects third parties and holds principals accountable for the actions of their agents.