Actual and Apparent Authority under the Legal Agency Law

This report explains the differences between actual and apparent authority under the law of agency, including relevant cases. It also discusses the scope of authority and the contractual liabilities and rights created by each type of authority.

Actual and apparent authority under the legal agency law
Legal Agency Law
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Actual and apparent authority under the legal agency law
Introduction
In the law of Agency the Agent has some authority which is distributed in the form of
actual and apparent authority under the law of agency. In this report differences between the
actual and apparent authority under the law of agency has been described by undertaking
various laws and cases.
In the terms of Actual Authority, it can be in the way of express or implied authority.
In the express form the principal has to explain to the agent in a very precise and proper way
that what an agent has to do in the position of being an Agent. It is analysed that power of
attorney could be the example of given express authority. The construction of words which
are used in the documents can be worked out for the scope of express authority. In this case,
third party gets the knowledge about the limitation of the authority of the agent or diseovered
the related examination, he will be bound by it. An agent cannot borrow from anybody on
behalf of his principal unless he is authorised to do so. However, an agent could have
authority to do all the works on the behalf of his principle on the basis of shared documents
and details.
In the case of Withington v. Herring (1 the829) 5 Bing. 442: 130 E.R. 1132, it was
held that the agent could borrow capital form market. Here the fact is that he borrowed
beyond the authorised limit. However, it does not prevent party to from the holding the
principle’s liability. In the case of Hambro v Burnand 1904 2 KB 10 CA 33 Watteau v
Fenwick 1893 1 QB 346 QBD), it was held in this case that if the agent has acted with an
improper motive does not take case beyond the scope of authority. If in case, agent does
anything beyond his authority then he would be liable for that particular task. Therefore, it
was concluded that if agent wants to undertake particular task then he should be liable for that
task if taken beyond the given authority.
In the case of Attwood v Munnings (1827) 7 B and C 278; 108 ER 727, in this case,
it was held that principal was going to abroad while he was authorising the agent and at the
same time his partner will carry his business. In addition to this, his wife would accept the
bills on the behalf of his business. For which the agent was authorised and which was
completely different from the undertaken personal business (Braunschweig, 2019).

In the Case of Reid v Rigby and Co [1894] 2 Q.B. 40, QBD, In this case the agent
has obtained loan outside his authority by signing cheque for his principle then he will be
liable for the same personally. He would pay workmen of principal, here the principal was
held bound (Ernes, 2017). In the implied form of authority which can also be termed as
incidental authority states that it occurs when it is impossible or impracticable to fully specify
the authority and duties of an agent. The Actual Authority comes when the principal (if exist)
express his statement to determine the authority of the agent. The principal expresses his
standards or usages of the trade, the nature of the agency agreement and other terms and
conditions to his agent. Most of the agreements which are implied in nature gives the
authority to the agent to perform such kind of duties which are customarily undertaken. The
agent does his duty which is reasonably necessary to conduct the business of the agent
(Rainey, 2017). The duties which are authorised to an agent cannot be implied that can
conflict with the express statement of the principal which is intended to limit the authority of
the agent. The implied authority can be partially be determined by whether the agent is
employed to provide a service for a continuous terms which includes a series of transactions
as in general agent or a single transaction as in for a special agent. When the authority is
inferred from the circumstances of the case it is said to be the implied authority. The main
difference between express of implied authority depends upon the circumstances of the case
whether the authority is delimited by the conduct or words (Cassim, and Cassim, 2017). This
case has shown the implied authority which depends upon the circumstances of the cases and
authority undertaken in the agreement. Agent can do other acts but that for all the acts agent
he would be liable.
In the case of Eva Weaver v. Priscilla Deverell, W2011-00563-COA-R3-
CV (Tenn. Ct. App. 2011), it was given that Percy holmes entered into contract to purchase
life insurance policy for $25,000 in this he named his partner Eva Weaver as the primary
beneficiary. Weaver paid premiums for over 20 years. In 2009, Holmes designated his
daughter Priscilla Deverell his power of attorney. After that, beneficiary was changed from
Eva to herself. Percy dies in 2010, after that both the women entered into the contract for the
benefits given in the policy. After that Weaver filed compliant Weaver that Priscilla has
committed fraud by changing the name of beneficiary. The court ruled in favour of Weaver
(Reid, and Filby, 2018). It is found that the main difference between express of implied
authority depends upon the circumstances of the case whether the authority is delimited by

the conduct or words. However, implied contracts are always covered in the apparent
contract.
This authority is also known as ostensible authority. It often appears to be the authority of an
agent to others. This case was often confides with the available actual rights. The term
ostensible authority denoted ‘no authority’ at all. It is conventionally used phrase which
reveals the situation when one person clothed another to assume to have the power of
appearance authority. In this way the third party is misled into believing that the real
authority exists. The Apparent authority is described as the behaviour of the principal which
is interpreted by the third party to lead him to reasonably believe that the agent is authorised
by the principal to act in the agency (Tettenborn, 2018). In this way it can be termed as the
agent has the Apparent Authority. This kind of authority is manifested in the apparent
consent as it is viewed by the third party of the principal to the agent’s action. In this kind of
authority the communication between the agent and principal is irrelevant to determine the
existence of an agency relationship. In the exceptional cases where the communication is
known to the third party or it affects the behaviour of the agent as it is seen by the third party.
The direct statements given to the third party by the principal or the other trade or business
practices can establish an apparent authority. The agent himself cannot make an apparent
authority but he can endeavour to create the apparent authority. If however the agent has
expressed to the agent to exercise his authority which is limited in nature and the permission
is known by the third party then also it can create the apparent authority. The apparent
authority has the potential to make a binding relation between the principal and the third to
the contracts even though the principal did not appoint the agent with the authority and power
to form contracts. Thus it could be inferred that board of directors or BOD appoints one of
their directors to be the managing director of company. They invest on him not only the
implied authority but also with the ostensible authority to do all such acts which fall within
the usual scope of that office (Clarke, et al. 2017). The apparent authority would be based on
the own due diligence and should be undertaken by the agents effectively.
In the case of PICKERING v. BUSK, 1812, 15 EAST 38. This case portrays the
truth of Lord Ellenborough’s observation which states that the apparent authority is real
authority.
In the case of Egyptian International Foreign Trade Company v. Soplex Wholesale Supplies
Limited ( The Raffaella ), (1985) 2 Lloyd’s Report 36. It was held that the doctrine of

apparent authority is the application of the principal of estoppel which means that the person
is not permitted to resist an inference which reasonably be drawn from the conduct or words
of the principal.
According to the Anson Law of Contract Page 671 (28th Edition), it says that the person who
is indulged in making the representation is based on the estoople from the denying ostensible
right. It was done with a view to create a contract of agency (Merkin, and Devenney, 2018).
In the case of Attorney general for Ceylon v. Silva (1953) A.C. 461. It was held that the
ostensible authority is not created by the simple representation of the agent. The
representation must be made by or with the authority of the principal. If the representation
made by or without the authority of the principal then agent himself would be liable for the
act done by him. In the case of Farquharson Brothers v. King and Company (1902) A.C.
325. It was held that all the third party of the agency must rely on the representation of
authority of agent to act or work as agent. In the case of Armagas Ltd v Mundogas SA
[1986] 1 AC 717, it was held that the want of agent’s authority must be unknown to the third
party (Han, 2018). However, if in case, third party going to enter into the contract with the
agent then he has right to know the specific person who has the whole sole authority.
In the apparent authority the statutory provision states that if the agent has acted or
incurred some obligation to third party without authority on behalf of the principal then in
this case the principal is bound by the acts and obligations of the agent if he has induced the
third party to believe that such obligations or acts were in the scope of the authority of the
agent. In the words of Willis J it was held that when once it is established that the real
principal was the defendant, in this case the ordinary doctrine of principal and agent applied
that the principal is liable for the acts and work which falls under the prinicople and agent
usual authority. It is confined to the agent notwithstanding limitations put upon the principal
and agent (DeMott, 2017)
Differences between Actual and Apparent authority under the law of agency
1. Actual authority could be defined as principle specially informs the third party that agent will
be acting or working on the behalf of the principle. It is included as real estate agent a stock
broker, an insurance agent and partnership (Gustavsson, Karlsson, and Persson, 2017).
Apparent authority is that where a third party believes that by the conduct of the agent and
principal the agent has the authority of the principal to bind the principal. This applies in

employment sceneries, joint ventures and marital scenarios. Estoppal is applied to this
authority (Von Bogdandy, Goldmann, and Venzke, 2017). This has shown how actual and
apparent authority could be used by the agents to discharge his authority given by principles
to do work on his behalf. However, the undertaken work should be done on the basis of
apparent and
2. The Actual Authority is done when principle directly say to agent through the written
agreement to work on his behalf. It is authority which enters into a contract for a state or
municipal entity which is usually spelled out by the charter, statute and ordinance.
On the other side Apparent Authority is given and it does not need specific power to be given
to agent. Nonetheless, if any action is taken then it is not necessary that action would be legal
and binding on the principle under apparent authority. This develops where a third party has
developed a reliance on the agent which results in tangible business outcomes.
3. Actual Authority covers express and implied authority which is given by principle to agent. It
includes the acts of the agent necessary to perform the duty (Neriya-Ben Shahar, 2017).
In Apparent authority the principal made representation to the third party to the effect that the
agent has authority to act on his behalf although the agent does not such authority. The third
has representation to deal with the agent.
4. The scope of the actual and apparent authority is defined by the agreement undertaken
between the principle and agent. The customs and usages of the trade or business and the
course of dealing between both of them (Kerwin, and Furlong, 2018).
In the apparent authority, gives rise to the agency by the estoppel, this operates as an estoppel
which reduce the chances of ambiguity (Cosens, et al. 2017).
5. The contract made by the agent with the third party in the actual authority, it will create
contractual liabilities and rights between the third party and the principal. This authority
apparently apples to contractors generally in this was held in the case of Peter Bauwens
Bauunternehmung GmbH and Co., ASBCA 44679, 98-1 BCA
Here in the apparent authority the agent has only appearance of authority but no actual
authority by which he can act on behalf of the principal. But if the third party enters into the
contract with the agent in reliance on the representation of principal. This kind of contract
will still be legally binding on the principal (Roness, 2017).
6. The standard objective to know the difference between the actual or apparent authority is by
the conduct of the principal which will state if the principal has made reasonable belief that if
the third party was authorised by the principal in the manner relied on. The conduct of the
principle shows whether the agent has authority to do on the behalf of the principle or not.

Conclusion
The crux of this report is that both actual and apparent authority is required when
agent wants to work on the behalf of the principle and any acts done by the agent on the
behalf of the principle will be taken as liability of the principle.

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