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When does apparent (ostensible) authority of an agent arise?
- a)When the agent acts with the usual authority of his job.
- b)When the principal gives the agent implied authority to act.
- c)When the agent has actual authority to act.
- d)When the principal represents to a third party that an agent has authority to act when in fact he does not.
Correct answer is option 'D'. Can you explain this answer?
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When does apparent (ostensible) authority of an agent arise?a)When the...
Understanding Apparent Authority
Apparent authority, also known as ostensible authority, arises when a principal creates the impression that an agent has the authority to act on their behalf, even if the agent lacks actual authority. This concept is crucial in agency law, particularly in protecting third parties who rely on the representations made by the principal.
Key Points of Apparent Authority
- Principal's Representation: Apparent authority occurs when the principal communicates to a third party that an agent has the power to act, regardless of the agent's actual authority.
- Reliance by Third Parties: Third parties must rely on the principal's representations. If they reasonably believe that the agent has the authority, the principal may be bound by the agent's actions.
- Example Scenario: If a company (the principal) publicly states that a particular employee (the agent) is authorized to negotiate contracts, the company cannot later deny the agent's authority if the employee enters a contract with a third party based on that representation.
Importance of Apparent Authority
- Legal Protection: Apparent authority protects third parties who may not have knowledge of the limitations placed on the agent's authority by the principal.
- Encourages Trust: This doctrine fosters trust in business dealings, as it ensures that representations made by a principal are honored, even if internal disagreements exist regarding the agent's authority.
In summary, apparent authority arises when a principal represents to a third party that an agent has authority to act, thereby binding the principal to the agent's actions, regardless of the agent's actual authority.
Apparent authority, also known as ostensible authority, arises when a principal creates the impression that an agent has the authority to act on their behalf, even if the agent lacks actual authority. This concept is crucial in agency law, particularly in protecting third parties who rely on the representations made by the principal.
Key Points of Apparent Authority
- Principal's Representation: Apparent authority occurs when the principal communicates to a third party that an agent has the power to act, regardless of the agent's actual authority.
- Reliance by Third Parties: Third parties must rely on the principal's representations. If they reasonably believe that the agent has the authority, the principal may be bound by the agent's actions.
- Example Scenario: If a company (the principal) publicly states that a particular employee (the agent) is authorized to negotiate contracts, the company cannot later deny the agent's authority if the employee enters a contract with a third party based on that representation.
Importance of Apparent Authority
- Legal Protection: Apparent authority protects third parties who may not have knowledge of the limitations placed on the agent's authority by the principal.
- Encourages Trust: This doctrine fosters trust in business dealings, as it ensures that representations made by a principal are honored, even if internal disagreements exist regarding the agent's authority.
In summary, apparent authority arises when a principal represents to a third party that an agent has authority to act, thereby binding the principal to the agent's actions, regardless of the agent's actual authority.
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When does apparent (ostensible) authority of an agent arise?a)When the...
The authority of an agent may be actual, express, implied or apparent (ostensible) authority. If a third party relies on the representations of the principal that the agent has apparent authority, the principal will be bound by the agreement.
The Agent may act on behalf of principal, if the Principal represents to a third party that an agent has authority to act, though, in fact he does not.
The Agent may act on behalf of principal, if the Principal represents to a third party that an agent has authority to act, though, in fact he does not.
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When does apparent (ostensible) authority of an agent arise?a)When the agent acts with the usual authority of his job.b)When the principal gives the agent implied authority to act.c)When the agent has actual authority to act.d)When the principal represents to a third party that an agent has authority to act when in fact he does not.Correct answer is option 'D'. Can you explain this answer?
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When does apparent (ostensible) authority of an agent arise?a)When the agent acts with the usual authority of his job.b)When the principal gives the agent implied authority to act.c)When the agent has actual authority to act.d)When the principal represents to a third party that an agent has authority to act when in fact he does not.Correct answer is option 'D'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about When does apparent (ostensible) authority of an agent arise?a)When the agent acts with the usual authority of his job.b)When the principal gives the agent implied authority to act.c)When the agent has actual authority to act.d)When the principal represents to a third party that an agent has authority to act when in fact he does not.Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for When does apparent (ostensible) authority of an agent arise?a)When the agent acts with the usual authority of his job.b)When the principal gives the agent implied authority to act.c)When the agent has actual authority to act.d)When the principal represents to a third party that an agent has authority to act when in fact he does not.Correct answer is option 'D'. Can you explain this answer?.
When does apparent (ostensible) authority of an agent arise?a)When the agent acts with the usual authority of his job.b)When the principal gives the agent implied authority to act.c)When the agent has actual authority to act.d)When the principal represents to a third party that an agent has authority to act when in fact he does not.Correct answer is option 'D'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about When does apparent (ostensible) authority of an agent arise?a)When the agent acts with the usual authority of his job.b)When the principal gives the agent implied authority to act.c)When the agent has actual authority to act.d)When the principal represents to a third party that an agent has authority to act when in fact he does not.Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for When does apparent (ostensible) authority of an agent arise?a)When the agent acts with the usual authority of his job.b)When the principal gives the agent implied authority to act.c)When the agent has actual authority to act.d)When the principal represents to a third party that an agent has authority to act when in fact he does not.Correct answer is option 'D'. Can you explain this answer?.
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