Which type of authority is based on the appearance of authority to third parties?

• A. Express
• B. Implied
• C. Apparent
• D. Actual

Answer: (C)

Apparent authority is authority that a third party believes the agent has based on the principal’s conduct or representations. It arises when the principal’s actions or inaction create the impression that the agent can act on the principal’s behalf, and the third party reasonably relies on that impression. This can bind the principal even if the agent lacks real authority, as long as the third party’s reliance is reasonable.

This differs from actual authority, which the agent actually possesses—express authority is explicit permission, while implied authority is inferred from the agent’s duties and the usual conduct of the business. The key idea with apparent authority is not what the agent is truly empowered to do, but what the outside world reasonably thinks the agent can do because of the principal’s behavior.