ACCA LW · Chapter 7 · Question 1 of 10
Which of the following best describes ostensible (apparent) authority in agency?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Authority arising because the principal has represented to a third party that the agent has authority, and the third party relied on that representation
Explanation
Apparent authority arises by estoppel: the principal's words or conduct lead the third party to believe the agent has authority, and the third party relies on this, as in Freeman & Lockyer v Buckhurst Park Properties. The principal is then bound even if no actual authority exists. The other options describe express actual authority, agency of necessity and ratification.
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