Contract Glossary
Apparent Authority
Definition
When a third party reasonably believes someone has the authority to act on behalf of a business, even if that person doesn't actually have that authority. The business can be bound by the deal if it created the impression that the person was authorized.
In Practice
Your office manager has been ordering supplies and signing vendor contracts for years. You never gave them formal authority, but vendors reasonably believe they can commit your company. If the manager signs a $15,000 contract with a new vendor, you're probably on the hook — because you created the appearance of authority through your past behavior.
Common in these contract types
Frequently asked questions about apparent authority
Actual authority is permission you explicitly give someone — 'you can sign contracts up to $5,000.' Apparent authority exists when you haven't given permission, but a reasonable third party would think you did based on your conduct. Both can bind you to contracts, which is why apparent authority matters.
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Create your contractThis content is for informational purposes only and does not constitute legal advice. For contracts with significant financial or legal implications, review by a qualified attorney is recommended.