Apparent Authority Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Apparent Authority, written in plain English, along with examples of how it is used.

What is Apparent Authority?

n. essentially assigned risk is a poor risk that an insurance company is compelled to cover under state laws. If the state does not allow a person to drive without a insurance, and if the insurance companies do not accept the person, then the insurance is placed by the state. The state plan assigns the application to a licensed insurance company for issue of insurance to the concerned person. The purpose it serves is to provide automobile liability insurance to those who “in good faith” are entitled to but are unable to procure such insurance through ordinary methods.

History and Meaning of Apparent Authority

Apparent authority refers to a legal concept where a person is deemed to have the authority to act on behalf of another, even if they do not possess any actual authority. This authority is created by circumstances that would lead a reasonable person to believe that the person in question has such authority. For instance, if a store manager allows an employee to handle cash transactions despite not explicitly giving them the authority to do so, that employee would have apparent authority over cash transactions. The concept of apparent authority evolved from the need to ensure that contracts and other legal dealings could be carried out even in situations where actual authority was not clearly defined.

Examples of Apparent Authority

  1. A homeowner allows a contractor to hire subcontractors to perform work on their property. Even without explicit instructions from the homeowner, the contractor would have apparent authority to hire the subcontractors and manage the work.

  2. An employee in a customer service position offers a refund or exchange to a customer. Even if the employee does not have the actual authority to do so, their actions could be seen as having apparent authority and the company would be bound to honor the offer.

  3. A real estate agent is given a set of keys to a property by a seller in order to show it to prospective buyers. The agent would have apparent authority to enter the property for the purposes of showing it to potential buyers.

Legal Terms Similar to Apparent Authority

  1. Actual authority - refers to the explicit and verifiable authority given to a person to act on behalf of another.

  2. Ostensible authority - similar to apparent authority, refers to the authority that a person appears to have based on their position, but without any actual authority.

  3. Implied authority - authority that is assumed based on the actions of a person rather than explicitly stated.