Agency
The concept of 'apparent authority' in agency law can bind a principal when:
AThe principal expressly authorizes every action the agent takes
BA third party reasonably believes the agent has authority to act based on the principal's conduct, even if no actual authority exists✓ Correct
CThe agent acts for the benefit of the principal without authorization
DThe principal ratifies the agent's unauthorized actions after the fact
Explanation
Apparent authority arises when a principal's words or conduct lead a third party to reasonably believe the agent has authority to act. If the third party relies on this apparent authority to their detriment, the principal may be bound by the agent's unauthorized actions even though no actual authority was granted.
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Key Terms to Know
Agency
A legal relationship in which a licensee (agent) acts on behalf of a principal (buyer or seller) in a real estate transaction.
Dual AgencyA situation where a single real estate agent or brokerage represents both the buyer and the seller in the same transaction.
Fiduciary DutyThe highest legal duty an agent owes to a principal — requiring the agent to act in the principal's best interest above all others.
Listing AgreementA contract between a property owner and a real estate broker that authorizes the broker to market and sell the property.
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