Apparent Authority

Apparent authority (also called "ostensible authority") relates to the doctrines of the law of agency. It is relevant particularly in corporate law and constitutional law. Apparent authority refers to a situation where a reasonable person would understand that an agent had authority to act. This means a principal is bound by the agent's actions, even though the agent had no actual authority, whether express or implied. It raises an estoppel because the third party is given an assurance, which he relies on and would be inequitable for the principal to deny the authority given. Apparent authority can legally be found, even though actually authority has not been given.

There must be some act or some knowing omission on the part of the principal - if the agent alone acts to give the third party this false impression, then the principal is not bound. However, the principal will be bound if the agent so acts in the presence of the principal, and the principal stands silently and says nothing to dissuade the third party from believing that the agent has the authority to bind the principal. Apparent authority can also occur where a principal terminates the authority of an agent, but does not inform third parties of this termination. This is called lingering apparent authority. Business owners can avoid being liable by giving public notice of the termination of authority, and by contacting any individual third parties who would have had reason to know of such authority.

In relation to companies, the apparent authority of directors, officers and agents of the company is normally referred to as "ostensible authority." Apparent authority issues also arise in the Fourth Amendment context, concerning who has authority to consent to a search.