Explain what do you mean by Apparent Authority

Question

Explain what do you mean by Apparent Authority?

Answer 1

Apparent authority is authority that a third party is entitled to assume the agent possesses, based on either usual authority or the conduct of the principal. The term holding out is used to refer to conduct where a principal represents someone to be its agent. A principal is bound by contracts within the agent’s apparent authority only if the third party relied on the appearance of that authority. A third party will not be able to enforce a contract if it knew, or should have known, that the agent did not have authority to bind the principal.