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Apparent Authority
8/27/2024 pdw
An agent acts with apparent authority “when a third-party reasonably believes the actor has authority to act on behalf of the principal and that belief is traceable to the principal’s manifestations.” Restatement (Third) of Agency § 2.03. So if the principal says something or takes some action that causes a third-party to reasonably believe the agent is acting on behalf of the principal, then the agent has apparent authority and the principal will be bound.
Both actual authority and apparent authority require a reasonable belief traceable to the principal’s actions. In actual authority, it is the agent’s reasonable belief. In apparent authority, it is the third-party’s reasonable belief.
Also, note that the basis for that belief must be traceable to something the principal said or did. An agent's actions cannot create apparent authority for that agent. This makes sense. If the principal is going to be bound, the principal must be the one to manifest assent to be bound.
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