Apparent Authority

Apparent authority is define by the Freeman as, apparent authority is a legal relationship between the principal and the third party created by a representation made by the agent to the third party intended to be and in fact acted on by the third party that the agent had authority. In a more simple explanation, an apparent authority can be define as a representation made by the agent to the third party claiming that the agent has the authority to act but actually, the agent does not have the actual authority. However, the agent managed to persuade the third party that there is a legal relationship between the principal and the third party.

An apparent authority can be termed as agency by estoppels, in other words, it is an equitable principles. As for most of the equitable estoppels, it involve representation, reliance and unfair as a result of alteration of terms or contracts. There are 3 basic requirements to be met in order to qualify as an agency by estoppels. Firstly, there must be a representation. A representation can either be in writing or by conduct, for example, an appointment of a person to a Managing Director can be seen as a form of representation by conduct. Secondly, there must be reliance, the person must had relied upon the representation and believe agent has such authority. Lastly, if the third party had relied on the representation and thus goes into the contract based of the detriment, it is then unjust for the principal to deny his liability