Which of the following statements is true of an apparent agency?

Question

Quizplus · Accepted Answer

An apparent agency arises when a principal creates the appearance of an agency relationship with a third-party, even though no actual agency relationship exists. In such a situation, the principal can be held liable for the contracts entered into by the apparent agent, as long as the third-party reasonably believes that the agent had the authority to act on behalf of the principal. Therefore, statement B is true. Statement A is incorrect, as the authority of an apparent agent is not implied, but rather created by the actions of the principal. Statement C is incorrect, as the third-party is bound to the contract with the principal if they reasonably believed that the apparent agent had the authority to act on behalf of the principal. Statement D is incorrect, as the actions of the principal, and not the apparent agent, create an apparent agency.

Which of the Following Statements Is True of an Apparent