stensible (or Apparent) Authority is the authority of an agent as it appears to others. It arises when a principal, by words or conduct, leads a third party to believe that the agent has the authority to act, even if the agent has no actual authority or has exceeded it.
Key Principles (Section 237):
Doctrine of Estoppel: If the principal creates an appearance of authority, they are "estopped" from denying the agent's actions if a third party relies on that appearance in good faith.
Protection of Third Parties: The law protects innocent third parties who deal with an agent based on the principal's representations.
Example: If a company allows a manager to routinely sign contracts beyond their formal limit, and the company honors those contracts, the manager has "ostensible authority" to bind the company in future similar contracts.
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