“The doctrine protects innocent third parties who have reasonably relied to their detriment on the representations of those whose principal claims to have the power to act on his behalf.” For more information on apparent authority, see this Louisiana Law Review article, this Marquette Law Review article, and this Florida State University Law Review article. Even if the client has explicitly limited the agent`s capabilities, but these limitations are not known, the agent still has the apparent authority to do these things. FN4: Grease Monkey Intern., Inc. v. Montoya, 904 P.2d 468 (Colo. 1995) (describes Colorado`s previous views on apparent authority and notes that this power can arise even when an agent acts “solely for its own purposes” and “regardless of whether or not the principal is aware of the agent`s conduct”). Very often, the same situation that grants apparent authority will necessarily grant real authority. The notion of apparent authority derives from the law of the agency, in which one person is considered an agent of another person (the client). The question of apparent authority has arisen in cases involving searches of property without a search warrant. In Illinois v. Rodriguez, 497 U.S. 177 (1990), the Supreme Court held that “warrantless entry is valid if it is based on the consent of a third party whose police have reasonable grounds to believe at the time of entry that he or she has common authority at the scene, but who in reality does not.” Agents – whether they are other owners, managers, agents or employees – enable companies to get things done on a daily basis. Companies therefore give these agents real authority (explicit or implicit) to speak or act on behalf of the company itself.
In the context of commercial transactions, the notion of apparent authority may very well be relevant. Stay tuned as we have definitions, examples, legal concepts and more to explain! In Freeman and Lockyer v. Buckhurst Park Properties (Mangal) Ltd  2 QB 480, the director in question managed and acted on behalf of the company`s property and, as such, instructed the plaintiff architects to prepare plans for the development of the company`s owned land. The development eventually collapsed and the plaintiffs sued the company for their fees. The company denied that the director was allowed to employ the architects. The court concluded that, although he was never appointed chief executive officer (and therefore had no real, express or implied authority), his actions fell within his presumed authority and the board of directors was aware of and consented to his conduct. Diplock LJ has identified four factors that must be present before a company can be bound by the actions of an agent who is not authorized to do so; It must be proved that: The most important difference is that the third party acted with the agent (who had no real authority to act) and believed that he or she represented the client. Therefore, well-formulated forms or other submitted documents can adequately inform the relevant third parties in order to avoid obvious authority problems. But sometimes a simple letter or email to these third parties may be the best course of action. An apparent authority (also known as an apparent agency) refers to a situation in which a third party reasonably believes that a person or organization has the authority to act on behalf of another person.
In law, apparent authority refers to the authority of an agent as it appears to others, and it can serve both to extend real authority and to create authority where there is no real authority.  Company law and presumed authority are in reality only a subset of the rules on apparent authority and agency law in general, but because of the prevalence of the issue over company law (companies that are artificial persons are still only able to act through their human agents). It has developed its own specific case law. However, some jurisdictions use the terms interchangeably. The doctrine of apparent authority is based on the concept of forfeiture, so that it prevents the client from denying the existence of an agency to a third party, provided that he has made a representation to the third party, either by his words or by his deeds, of the authority of the agent. What is less known is that an agent – or even a former agent – of a company can bind that company if that person has only the obvious authority to speak or act on behalf of that company. FN4 Apparent authority arises when a third party reasonably believes that someone is an agent of the company. FN5 In these situations, the law protects reasonable third parties and the company is bound as if the (alleged) agent had acted with the actual authority of the company.