Which concept refers to authority created by the principal through actions that lead a third party to believe the agent can act on the principal's behalf, even if not actually granted?

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

Answer: (C)

Apparent authority occurs when the principal’s actions create an impression that the agent can act on the principal’s behalf, and a third party reasonably relies on that impression to deal with the agent, even though the agent has not actually been granted authority. The key is the third party’s reasonable belief based on the principal’s conduct, words, or past practices, not on any actual grant to the agent. For example, if a company presents a representative as empowered to sign contracts or uses official branding that suggests authority, a third party may lawfully rely on that to bind the principal. Express authority is a direct grant, actual authority includes what the agent reasonably believes they can do because of the principal’s statements or conduct, and ratification happens only when the principal later approves an unauthorized act. Here, the scenario describes authority created by the principal’s actions that leads the third party to believe the agent can act, even though no actual grant exists, which is why this concept fits.