Apparent authority Law of agency

apparent authority (also called ostensible authority ) exists principal s words or conduct lead reasonable person in third party s position believe agent authorized act, if principal , purported agent had never discussed such relationship. example, 1 person appoints person position carries agency-like powers, know of appointment entitled assume there apparent authority things ordinarily entrusted 1 occupying such position. if principal creates impression agent authorized there no actual authority, third parties protected long have acted reasonably. termed agency estoppel or doctrine of holding out , principal estopped denying grant of authority if third parties have changed positions detriment in reliance on representations made.

rama corporation ltd v proved tin , general investments ltd [1952] 2 qb 147, slade j, ostensible or apparent authority... merely form of estoppel, indeed, has been termed agency estoppel , cannot call in aid estoppel unless have 3 ingredients: (i) representation, (ii) reliance on representation, , (iii) alteration of position resulting such reliance.

watteau v fenwick in uk

in case of watteau v fenwick, lord coleridge cj on queen s bench concurred opinion wills j third party hold liable principal did not know when sold cigars agent acting outside of authority. wills j held principal liable acts of agent within authority confided agent of character, notwithstanding limitations, between principal , agent, put upon authority. decision heavily criticised , doubted, though not entirely overruled in uk. referred usual authority (though not in sense used lord denning mr in hely-hutchinson, synonymous implied actual authority ). has been explained form of apparent authority, or inherent agency power .

authority virtue of position held deter fraud , other harms may befall individuals dealing agents, there concept of inherent agency power, power derived solely virtue of agency relation. example, partners have apparent authority bind other partners in firm, liability being joint , several (see below), , in corporation, executives , senior employees decision-making authority virtue of declared position have apparent authority bind corporation.

even if agent act without authority, principal may ratify transaction , accept liability on transactions negotiated. may express or implied principal s behavior, e.g. if agent has purported act in number of situations , principal has knowingly acquiesced, failure notify concerned of agent s lack of authority implied ratification transactions , implied grant of authority future transactions of similar nature.