Apparent Authority Law and Legal Definition

Apparent authority is a concept used in agency law that refers to the situation that arises when a principal, such as a corporation, indicates to a third party that an officer or agent is authorized to act on its behalf and the third party relies in good faith upon such authority. It is used a defense when implied or espress actual authority does not exist. When the defense is successfully raised, the principal is estopped from denying the authority of the officer or agent.

Apparent authority may arise, for example, by giving someone who has no authority to contract materials, stationery, forms, a truck with a company logo, or letting him work out of the company office. A person with apparent authority but no actual authority may give a price quote on goods or services which is binding on a company.