If someone signs an agreement with apparent authority on behalf of an employer, what type of authority do they hold?

Apparent authority arises when a principal's actions lead a third party to reasonably believe that an agent has the authority to act on the principal's behalf, even if that authority was not explicitly granted. In the case where someone signs an agreement with apparent authority, it suggests that the principal—typically the employer—has created a situation where the agent appears to hold the authority to make commitments or enter into agreements.

This type of authority hinges on the perceptions of third parties rather than the internal specifics of the relationship between the principal and the agent. For instance, if an individual has been acting in a capacity that gives reasonable belief to others of their authority, and the employer has not clarified or restricted that authority, then the employer may be bound by agreements made under those circumstances.

Understanding apparent authority is crucial, especially in staffing and contractual situations, as it impacts liability and enforceability of agreements. By exploring this concept, it emphasizes the responsibility of employers to ensure clarity in delegation of authority, to protect themselves from unintended obligations.