Apparent authority
Certified Financial Planner glossary · Certified Financial Planner
Definition
Authority a reasonable third party would believe an agent possesses, binding the principal regardless of actual authorization.
Apparent authority in plain English
A salesperson who was fired last week still has business cards and closes a policy; the client had no reason to know. Apparent authority is what a reasonable third party would believe an agent possesses, and it can bind the principal even without actual authorization. Actual authority is what the principal truly granted. Agency stems often hide the gap between those two. Ask what the client reasonably believed, not only what the appointment letter said.
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