Also known as:apparent agencies · apparent agent · apparent agents · ostensible agency · ostensible agent
Written by attorneys · grounded in primary & secondary sources — see below
A doctrine under which a principal becomes bound by the acts of an apparent agent when the principal's manifestations cause a third party to reasonably believe that an agency relationship exists and to rely on that belief. The apparent agent thereby gains power to alter the principal's legal relations with third persons.
Sources & Authorities
How it applies
Common Examples
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Sales Engineer Binds Former Employer
Union Logic negotiated a multimillion-dollar software integration with Aidan, who continued using Creek Logic's branded email and slide decks after his employment ended. Creek Logic learned of the contacts through internal channels but took no steps to notify Union Logic or retract the indicia of authority. Union Logic reasonably relied on the ongoing appearance of authority and signed the agreement. Creek Logic is bound because the principal's silence and failure to correct the third party's belief created apparent agency.
Brokerage Client Loses on Unauthorized Borrowing
A securities salesman borrowed money from a client and gave his personal note instead of a security. The brokerage had never authorized such personal loans and had not held the salesman out as possessing that power. The client could not show any manifestation by the brokerage that created a reasonable belief in the salesman's authority to borrow on the firm's behalf. The brokerage therefore escaped liability under apparent agency.
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Restatements
Casebooks
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Study Supplements
Dictionaries
Blackburn v. Dean Witter201 Cal. App. 2d 518, 19 Cal. Rptr. 842 (5th Dist. Ct. App. 1962)
Common questions
Frequently Asked
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What manifestations by the principal create apparent agency?+
Apparent agency arises when the principal's words, conduct, or silence cause a third party to reasonably believe that an individual is authorized to act on the principal's behalf. Internal revocation of authority does not end apparent agency until the third party receives notice. The principal's failure to correct known misimpressions can itself constitute a sufficient manifestation.
Supporting sources
Does apparent agency apply to tort liability as well as contract claims?+
Yes. A principal who represents that another is its servant or agent and causes a third person to justifiably rely on the apparent agent's care or skill is subject to liability for harm caused by the apparent agent's lack of care. This rule operates independently of any employment relationship and extends vicarious liability to independent contractors when the principal has created the appearance of agency.
Supporting sources
How does apparent agency differ from actual authority?+
Actual authority arises from the principal's express or implied instructions to the agent. Apparent agency, by contrast, turns on the principal's manifestations to the third party that create a reasonable belief in the agent's authority. A principal may be bound under apparent agency even when the agent lacked actual authority and even when internal limitations were never communicated to the third party.
…Inc., and its bonding agency, Massachusetts Bonding and Insurance Company. If there is liability, it must rest on the theory of ostensible agency since Long clearly had no authority as an employee of either Walston and Company or Dean Witter and Company to borrow money for his personal use, or to take money from a client and give his…