What kind of authority exists based on reasonable belief of a third party?

Apparent authority exists when a third party has a reasonable belief that an agent has the authority to act on behalf of the principal, even if the agent does not have actual authority. This type of authority arises from the actions or representations made by the principal that lead the third party to believe that the agent has the authority to represent the principal in a particular transaction or situation.

For instance, if a principal allows an agent to behave in a way that suggests they have the authority to make decisions or enter into contracts, and a third party reasonably relies on that behavior, the principal may be bound by the actions of the agent, even if the agent actually lacked the necessary authority. This principle protects third parties who enter transactions based on their perception of authority created by the principal's conduct.

In contrast, actual authority refers to the actual powers granted to an agent by the principal, while express authority is specifically outlined and communicated. Implied authority arises from the usual authority necessary to carry out expressed authority. Therefore, these types of authority do not hinge on the reasonable beliefs of third parties in the same way that apparent authority does.