Apparent Agency

Definition - What does Apparent Agency mean?

Apparent agency describes a scenario in which a person or company gives someone the semblance of being authorized to act on their behalf when, in fact, they are not authorized to do so.

Apparent agency can never arise solely from the acts of the alleged agent, but must involve some actions from the party that has the ability to authorize the agent to act on their behalf.

It is also known as apparent authority.

Insuranceopedia explains Apparent Agency

A person might be said to have apparent authority if a company contributes to the appearance that they are authorized to act on its behalf. They may, for example, give them use of an office in their corporate building, provide them with company letterhead, or give them use of a company vehicle. In cases such as these, a person dealing with the apparent agent could reasonably, albeit falsely, assume that they have the authority to act on the company's behalf.

An employee of a company might also have apparent authority if they go beyond their allowed duties. For example, a salesperson who is not authorized to issue contracts on the company's behalf nevertheless drafting and presenting one to a potential client.

The absence of real authority does not necessarily render the transaction between the apparent agent and the client void. If the company has played a role in imparting the appearance of authority, it may be liable for the apparent agent's actions.

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