Which term describes the appearance of authority based on the actions or circumstances created by the principal?

The term that describes the appearance of authority based on the actions or circumstances created by the principal is apparent authority. This concept arises when a principal's conduct leads a third party to reasonably believe that an agent has the authority to act on the principal's behalf, even if the agent does not actually possess such authority.

For instance, if a business owner frequently allows an employee to negotiate contracts on their behalf and does not take steps to inform clients that this employee does not have that authority, the employee is viewed as having apparent authority. This can bind the principal to contracts signed by the employee, as third parties can reasonably assume that the employee has the authority based on the principal's actions.

While actual authority refers to the clear and specific powers granted to an agent by the principal, and implied authority encompasses powers that are necessary for carrying out expressed authority, neither of these terms captures the essence of authority that is perceived by others due to the principal's actions. Normal authority is not a recognized term in this context. Thus, apparent authority is the most accurate and relevant term regarding this question.