Table of Contents
When it comes to business, especially real estate, the authority with which an individual acts can vary. In the scenario presented, we encounter an interesting dilemma involving Derrick, Paul, and Sally.
Stage
Derrick is the owner of a real estate firm. He hires Paul to handle all business operations, but clearly states that all business decisions must be discussed with him. Sally, a marketing representative, approaches to offer her services and, upon seeing Paul's tag indicating that he is the office manager, assumes that he has the authority to make business decisions. Without consulting Derrick, Paul decides to acquire Sally's services.
Types of Authority
- Express Authority: Refers to authority that is specifically granted through verbal or written instructions.
- Implied Authority: It is that authority that an agent is supposed to have to perform acts that are reasonably necessary.
- Actual Authority: It is the real power granted to an agent by the principal.
- Apparent Authority: Refers to authority that, although not expressly granted, is perceived to have been granted due to the actions or behavior of the principal.
The verdict
In this situation, even though Derrick gave Paul no actual authority to make business decisions without consulting him, Sally assumed that Paul had such authority based on his office manager title. Therefore, what prevails here is the «Apparent Authority» (Apparent Authority).
Conclusion
It is vital that companies clearly define and communicate the responsibilities and limits of authority of their employees. This will avoid confusion and possible conflicts in the future. In this case, the lack of clarity led to a situation where apparent authority prevailed.
