The agent (the one with apparent authority) must not give the third party a false or misleading impression of authority, or else the principal is not bound to the contract.Īpparent authority is also sometimes referred to as “ostensible authority.” 3.

Apparent AuthorityĪpparent authority is a type of authority that occurs when an individual is believed to have authority when it may not have been expressed or implied. It occurs when a principal’s action requires a third party’s evaluation to which they would understand why the agent would have the authority to act. Implied authority is a type of authority that occurs when an individual is assumed to be authorized to make a legally binding contract on behalf of a principal. In business transactions such as real estate, there are three types of authority that can be used – implied, apparent, and expressed. Implied authority is not written on paper rather, an agent is assumed to possess authority in order to conduct business transactions and contracts for the principal party in question.

Implied authority is a legal term that is used in contract law and refers to the ability an individual has to make a legally binding contract on behalf of another person or organization.

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