4 Apparent Authority

Abstract

This chapter describes ‘apparent authority’—otherwise known as ‘ostensible authority’. It arises when a third party is induced to enter into a transaction with a principal by a party who appears to have authority to act but who in fact lacks such authority. It is not authority, as such. Rather, the law gives effect to the appearance of authority, despite the fact that in reality there is no actual authority to act. The appearance may be created by the principal’s specifically misrepresenting to third parties that the agent enjoys authority to perform certain acts or by the principal’s allowing third parties to infer that the agent has the authority that such an agent would usually possess. In contrast to actual authority, the doctrine of apparent or ostensible authority is generally agreed to be based on estoppel by representation.