Q.
Distinguish actual authority from apparent or ostensible authority.
A.
4 types of authorities of agent here.
LawTeacher has a write up on this here.
An agent is an individual who can represent and bind others to contractual commitments.
When an agent acts, they can possess a number of different types of authority. This can be Actual Express, Actual Apparent, Apparent and Assumed.
Actual authority is where the principal knowingly and specifically informs potential third parties that an agent will be acting under their authority for a transaction. This can include a Real Estate Agent, a Stock Broker, Partnerships, and an Insurance Agent.
Apparent authority is where a third party believes by the conduct of the agent, and principle that the agent has the principles authority to bind the principle. This can occur in employment sceneries, marital scenarios, and in Joint Ventures.
Estoppel is a principle that applies especially to apparent authority. Where an individual knows or aught to know that either their benefit or someone else's detriment is being caused by the belief of an agency relationship, when in fact non exists, that relationship will be held to be constructively valid.
Equity will not allow an individual to be taken advantage of, or another unjustly enriched through false impressions.
Ref:
Lord Denning MR, in Hely-Hutchinson v Brayhead Ltd (1967) said:
"Ostensible or apparent authority is the authority of an agent as it appears to others. It often coincides with actual authority. Thus, when the board appoint one of their number to be managing director, they invest him not only with implied authority, but also with ostensible authority to do all such things as fall within the usual scope of that office.
Other people who see him acting as managing director are entitled to assume that he has the usual authority of a managing director. But sometimes ostensible authority exceeds actual authority. For instance, when the board appoint the managing director, they may expressly limit his authority by saying he is not to order goods worth more than £500 without the sanction of the board. In that case his actual authority is subject to the £500 limitation, but his ostensible authority includes all the usual authority of a managing director.
The company is bound by his ostensible authority in his dealings with those who do not know of the limitation. He may himself do the "holding-out." Thus, if he orders goods worth £1,000 and signs himself "Managing Director for and on behalf of the company," the company is bound to the other party who does not know of the £500 limitation, see British Thomson-Houston Co Ltd v Federated European Bank Ltd.,[2] which was quoted for this purpose by Pearson L.J. in Freeman & Lockyer.
Even if the other party happens himself to be a director of the company, nevertheless the company may be bound by the ostensible authority. Suppose the managing director orders £1,000 worth of goods from a new director who has just joined the company and does not know of the £500 limitation, not having studied the minute book, the company may yet be bound. Lord Simonds in Morris v Kanssen,[3] envisaged that sort of case, which was considered by Roskill J. in the present case."
So, apparent authority is very much taken as actual authority in Royal British Bank v Turquand (1856), where the outsider, not familiar with the internal operation of the company, would assume that the dealings of the company is within the power vested in the directors and agents of the company. Thus, in many instances, the apparent authority is very much actual authority in outsider's eyes.
Ref:
Hely-Hutchinson v Brayhead Ltd [1967], available athttps://en.wikipedia.org/wiki/Hely-Hutchinson_v_Brayhead_Ltd