Also known as: apparent authority · ostensible authority
Written by attorneys · grounded in primary & secondary sources — see below
The power to affect the legal relations of another person by transactions with third persons, professedly as agent for the other, arising from and in accordance with the other's manifestations to such third persons.
Ridge Systems' CEO introduced Dennis to Southern Byte representatives as head of enterprise partnerships and then left for a trip. Dennis signed a licensing agreement on company letterhead. Southern Byte reasonably relied on the introduction when entering the deal.
A general partner in a limited partnership committed the entity to a forward contract during ordinary trading activities. The counterparty had no notice of any internal limits on the partner's power.
A partner signed a supply contract on behalf of the partnership in the ordinary course of business. The supplier had previously dealt with the same partner and reasonably believed the partner spoke for the firm.
Select any source to read its text and confirm it supports the definition.
A lawyer of record told opposing counsel that the client had approved settlement terms. Opposing counsel had no notice of any limits on the lawyer's power and relied on the representation to dismiss claims.
An agent sold equipment beyond the principal's internal price limits. The buyer had dealt with the agent before and reasonably believed the agent could complete the sale based on the principal's prior conduct.
A general partner received payment from a third party for partnership services and then misapplied the funds. The third party had dealt with the general partner under circumstances creating the appearance of authority to receive the payment.
It arises when a principal's manifestations to a third party reasonably lead that party to believe an agent has authority to act. The third party's reasonable belief, created by the principal's conduct, binds the principal even without actual authority.
Supporting sources
It terminates when the third party receives notice that the principal no longer consents to the agent acting on its behalf. An internal revocation alone does not end the appearance of authority until communicated or otherwise made known to the third party.
Supporting sources
No. It exists independently when the principal's manifestations create a reasonable belief in the third party, regardless of whether the principal privately authorized the specific act.
Supporting sources
Yes. A partnership is liable for a partner's wrongful acts or misapplication of funds when the partner acts with apparent authority in the ordinary course of business.
Supporting sources
Yes. A lawyer of record is presumed to have apparent authority to settle litigation. The opposing party may rely on that appearance absent notice of limitations, and the settlement binds the client.
Supporting sources
…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…