Also known as: ostensible agents · apparent agent
Written by attorneys · grounded in primary & secondary sources — see below
An individual who reasonably appears to possess authority to act on behalf of another. The appearance of authority arises from the principal's manifestations to third parties, allowing the ostensible agent to alter the principal's legal relations with those parties even without actual authority.
Aurora Suites LLC placed Lena in the role of assistant front office manager and permitted her to approve discounted group reservations without objection. Nimbus Corp negotiated a yearlong discounted block with Lena on hotel letterhead and signed the contract. Aurora later refused to honor the deal, claiming Lena lacked actual authority. Lena's apparent authority as an ostensible agent altered Aurora's legal relations with Nimbus, binding the hotel to the contract.
Apex Fabrication's sales director introduced Lee to Ramos Steel's representative as the person who makes the big purchasing decisions. Lee routinely ordered raw materials and signed a long-term exclusivity contract with Ramos. Apex later refused to honor the contract, citing internal limits on Lee's authority. Lee's status as an ostensible agent gave him power to bind Apex to the agreement with Ramos.
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An ostensible agent lacks actual authority but possesses apparent authority created by the principal's manifestations to third parties. The principal's conduct leads a reasonable third party to believe the person is authorized, and the third party relies on that appearance. This allows the ostensible agent to bind the principal even when internal limits on actual authority exist.
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An ostensible agent holds the power to alter the legal relations between the principal and third persons. This power exists because of the agency relation and the principal's manifestations, even without actual authority. The principal becomes bound by the ostensible agent's acts within the scope of the apparent authority.
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Internal revocation ends actual authority but does not automatically terminate apparent authority. Apparent authority continues until the third party receives notice of the termination or facts making reliance unreasonable. Without such notice, the ostensible agent can still bind the principal.
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Yes, when the principal's manifestations create reasonable reliance by the third party. The ostensible agent's acts within the apparent authority alter the principal's legal relations, even if the contract exceeds undisclosed internal dollar limits or requires higher approval.
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