Also known as: prima facie authorities · apparent authority
Written by attorneys · grounded in primary & secondary sources — see below
A presumption arising from an agent's position or role that the agent possesses authority to bind the principal in transactions with third parties. The presumption allows reliance on the agent's statements or acts unless limitations on authority are disclosed to the third party.
Pierre Poulin retained counsel to defend a contract suit. Counsel told opposing counsel that Poulin would accept a $75,000 settlement. Opposing counsel prepared release documents and wired funds. Poulin later claimed counsel lacked actual authority. The court enforced the settlement because counsel's status as attorney of record supplied prima facie authority to bind the client.
Platinum Partners, a limited partnership, had its general partner sign a supply contract in the ordinary course of business. The supplier relied on the signature. When the partnership later denied liability, the court held the general partner's act carried prima facie authority, making the partnership liable for the resulting loss.
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Patrick Phan, a partner in a general partnership, received customer payments on the firm's behalf and then diverted them. The customers sued the partnership. Because Phan acted with prima facie authority while handling partnership business, the partnership was held liable for the misapplied funds.
Patricia Patel's attorney of record told opposing counsel that Patel agreed to dismiss her claims in exchange for a payment. The opposing party prepared the dismissal. Patel later denied authorizing the settlement. The court enforced the agreement because the attorney's status created prima facie authority to settle the litigation.
Premier Manufacturing's sales agent promised a customer extended credit terms that the principal had internally forbidden. The customer relied on the promise and placed a large order. The court imposed liability on the principal because the agent's position supplied prima facie authority even though actual authority was absent.
Pulse Media, a limited partnership, had its general partner receive advertising revenue from a non-partner client. The general partner then diverted the funds. The client sued the partnership. Because the general partner received the money while acting with prima facie authority, the partnership was liable for the loss.
Prima facie authority is a presumption arising from an attorney's role as counsel of record that allows third parties to rely on the attorney's statements in litigation. Actual authority depends on the principal's express or implied grant of power to the agent. The presumption protects opposing parties who lack notice of any internal limitations.
Yes, the presumption permits opposing counsel to rely on the attorney's representation that a settlement has been reached. The client remains bound even if the attorney exceeded actual authority, provided the opposing party had no notice of any limitation.
No, the partnership is liable for acts done in the ordinary course or with apparent authority. The presumption protects third parties who reasonably rely on the partner's position within the firm.
The client must give clear notice to the opposing party that the attorney's authority is limited. Without such notice, the opposing party may continue to rely on the attorney's statements and actions in the litigation.
…that the making of such statement was within the authority of the agent or, as to persons dealing with the agent, within the apparent authority or other power of the agent" (emphasis added). Restatement (Second) of Agency § 285 (1958). See Levie, 52 Mich. L. Rev., at 1161. The reason behind this concept is that the agent's…