Discuss apparent authority and some common ways in which it might arise
Apparent authority is the power arising from words or conduct of a disclosed or unidentified principal that, when manifested to third persons, reasonably induce them to rely upon the assumption that actual authority exists. Apparent authority confers upon the agent, or supposed agent, the power to bind the disclosed or unidentified principal in contracts with third persons and precludes the principal from denying the existence of actual authority. Common ways apparent authority may arise include:
a. When a principal appoints an agent to a position in an organization, third parties may reasonably believe that the agent has the authority to do those acts customary of an agent in such a position.
b. If a principal has given an agent general authority to engage in a transaction, subsequently imposed limitations or restrictions will not affect apparent authority to engage in that transaction until third parties are notified of the restrictions.
c. The principal's acquiescence in prior similar transactions between the agent and a third party may create a basis for the third party reasonably to believe that the agent has apparent authority.
d. The agent shows the third party a document, such as a power of attorney, from the principal authorizing the agent to enter a transaction.
e. After many terminations of authority an agent has lingering apparent authority until the third party has actual knowledge or receives notice of the termination.
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