What are the differences between actual and apparent authority?
Actual authority and apparent authority are two different types of authority granted by a principal to an agent in a business transaction. Actual authority is the authority granted by a principal to an agent that is actually written in the contract. It is the authority that the principal intended to grant to the agent. Apparent authority, however, is the authority that the principal did not necessarily grant to the agent but that the agent assumes he or she has according to the circumstances. For example, if an agent makes decisions that appear to be authorized by the principal, even though the principal never actually granted the agent that authority, then the agent may have apparent authority. In North Carolina, the distinction between actual and apparent authority is important because it will determine who is liable for any contract made by an agent on behalf of a principal. If the agent is found to have had actual authority, then the principal is liable for the contract; however, if the agent is found to have only had apparent authority, then the agent may be liable for any contract made. Additionally, this distinction may also help determine if a contract is valid or invalid. If an agent is found to have had actual authority to make a contract, then the contract is considered valid, but if an agent is found to have only had apparent authority, then the contract may be deemed invalid.
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