Final answer:
Lingering apparent authority applies when an agent continues to act on behalf of a principal despite the termination of actual authority, and third parties are unaware of the change. The principal may then be a held responsible for the agent's actions if third parties relied on the agent's apparent authority in good faith.
Step-by-step explanation:
An agent's lingering apparent authority applies in the principal-agent relationship after the actual authority has been terminated, but third parties are not aware of this. Lingering apparent authority arises when the agent continues to act on behalf of the principal after the termination of actual authority, often because the principal failed to notify third parties of the change. This apparent authority binds the principal to the actions of the agent, provided that the third parties act in good faith and it is reasonable for them to believe the agent is still authorized.
In order for lingering apparent authority to apply, the principal must have previously established the agent's authority to third parties. When the principal ends the agent's actual authority, they are responsible for communicating this change to all relevant third parties. If the principal neglects to do so and the agent continues to act on behalf of the principal, the law may hold the principal responsible for those actions. This underlines the importance of properly managing the termination of an agent's authority in business relationships.