Also known as: apparent authorities · ostensible authority
Written by attorneys · grounded in primary & secondary sources — see below
A power of an agent to affect the principal's legal relations with third parties that arises from the principal's manifestations to those third parties. The third party must reasonably believe the agent possesses authority based on the principal's conduct or statements.
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Argonaut Shipping supplied its sales manager with firm letterhead and permitted client meetings at company offices. The manager signed a long-term charter agreement with a customer who relied on the manager's apparent role. Argonaut Shipping is bound by the contract even though internal policy limited the manager's signing power.
Aurora Biotech's general partner negotiated and signed a supply contract with a vendor while using partnership letterhead. The vendor had no notice of any internal limits on the general partner's power. Aurora Biotech must answer for the resulting obligations under partnership liability rules.
Avalon Pharmaceuticals allowed one partner to handle all vendor negotiations without public restrictions. That partner entered a purchase agreement with a supplier who reasonably believed the partner spoke for the firm. The partnership is liable for the contract price.
Alan Ackerman's attorney of record told opposing counsel that Ackerman had agreed to settle pending litigation. Opposing counsel had no notice of any limits on the attorney's settlement power. The court enforces the settlement against Ackerman.
Apollo Energy placed its regional manager in charge of customer accounts and supplied business cards. The manager promised a client priority service terms beyond company policy. Apollo Energy remains bound because the client reasonably relied on the manager's apparent authority.
Angela Acosta's limited partnership received payment from a customer through its general partner. The general partner misapplied the funds while acting under apparent partnership authority. The partnership must reimburse the customer for the loss.
A principal creates apparent authority by words or conduct that, when reasonably interpreted by a third party, cause the third party to believe the principal consents to the agent's acts. Supplying business cards, letterhead, or allowing client meetings without disclaimers are common examples of such manifestations.
Supporting sources
…that the making of such statement was within the authority of the agent or, as to persons dealing with the agent, within the apparent authority or other power of the agent" (emphasis added). Restatement (Second) of Agency § 285 (1958). See Levie, 52 Mich. L. Rev., at 1161. The reason behind this concept is that the agent's…
…empirical and conceptual problems add up to a real risk that an expert’s judgment in giving capacity evidence will come with an apparent authority that psychologists and psychiatrists do not claim to have. We think that this risk, like the difficulty in assessing the significance of mental-disease evidence, supports the State’s…
…871, 873-875 (Ct.App. 1953) (under New Jersey law, estoppel defense invocable by purchaser where owner vested vendor with apparent authority to dispose of or sell the particular chattel); Hertz Corp. v. Hardy , 197 Pa.Super. 466, 471-476, 178 A. 2d 833, 836-838 (Super.Ct. 1962) (estoppel is an affirmative defense to an…
…a discriminatory work environment is different because the supervisor “is not exercising, or threatening to exercise, actual or apparent authority
…As to the bank: It was put upon notice of the improper activities of its employees, Gale and Haslem, knowingly created the
Apparent authority continues after actual authority ends unless the principal notifies third parties of the change or takes other reasonable steps to dispel the prior appearance of authority. Leaving an agent with access to firm resources without notice preserves the appearance.
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A partnership is liable when a partner acts with apparent authority in the ordinary course of business and a third party relies on that appearance. The same rule applies in limited partnerships for acts of general partners.
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A lawyer of record is presumed to have apparent authority to settle litigation. Absent notice of limits, opposing parties may rely on the lawyer's representations and enforce the settlement against the client.
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The third party must show reasonable belief in the agent's authority induced by the principal's manifestations and a change of position in reliance on that belief. Unreasonable reliance or inquiry notice defeats the claim.
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