Final answer:
Apparent authority arises when an agent seems to have the authority based on the principal's actions, even if the actual authority was overstepped.
Step-by-step explanation:
The authority of an agent that is created when the agent oversteps actual authority but the principal's actions still give the impression that such acts are authorized is known as apparent authority. This concept is based on the principle of estoppel, where the principal's behavior creates a reasonable belief in the third party that the agent has the necessary authority to act. It differs from express authority, which is explicitly given by the principal to the agent, and implied authority, which is authority tacitly granted as necessary to fulfill the express authority. Apparent authority can be seen in the workplace, for example, when an employee who has always been allowed to negotiate contracts on behalf of the company continues to do so even after their actual authority has been revoked, without the knowledge of the third parties they deal with.
The authority of an agent that is created when the agent oversteps actual authority is called apparent authority. Apparent authority is a form of authority that is created when a principal represents or knowingly permits an agent to represent to a third party that the agent has authority to act on behalf of the principal, even though the agent may not actually have that authority. It occurs when the principal holds the agent out as having authority or has acted in a way that would lead a reasonable person to believe that the agent has authority.