Apparent authority

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Apparent authority is a term used in the law of agency to describe a situtation in which a principle leads a third party to believe that an agent has authority to bind the principle, even where the agent lacks the actual authority to bind the principle. In such circumstances, the law will hold the principle liable for the acts of the agent, out of fairness to the third party. There must be some act or some knowing omission on the part of the principle - if the agent alone acts to give the third party this false impression, then the principle is not bound. However, the principle will be bound if the agent so acts in the presence of the principle, and the principle stands silently and says nothing to dissuade the third party from believing that the agent has the authority to bind the principle.

Apparent authority can also occur where a principle terminates the authority of an agent, but does not inform third parties of this termination.

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