A third party's reasonable belief that an agent has authority to act on the principal's behalf.

• A. Apparent authority
• B. Actual authority
• C. Implied authority
• D. Express authority

Answer: (A)

Apparent authority is the authority a third party reasonably believes the agent has to act for the principal, based on the principal’s representations or conduct. In this situation, the third party’s reasonable belief that the agent can act on the principal’s behalf creates binding effect even if the agent lacks actual authority. The key is the reasonable reliance by the third party and the principal’s conduct or representations that gave rise to that belief.

Express authority is explicit permission from the principal to the agent. Implied authority comes from the agent’s role, duties, or customary practices. Actual authority encompasses both express and implied authority that the principal actually grants. However, the scenario hinges on the third party’s perception, which is why apparent authority is the best fit.