What is the difference between "actual authority" and "apparent authority" in agency relationships?

Actual authority refers to the authority that an agent has been explicitly granted by the principal, which can be either expressed or implied. This is a legal relationship where the agent has the ability to act on behalf of the principal based on clear instructions or inferred from the actions and relationship of the parties involved. For example, if a seller appoints a real estate agent to list their property, that agent has actual authority to perform specific tasks like showing the property and negotiating offers.

On the other hand, apparent authority is not based on direct agreement between the principal and the agent. Instead, it arises when a third party perceives that the agent has the authority to act on behalf of the principal due to the principal's conduct. This can occur even when the agent does not actually have the authority granted to them. For instance, if a real estate agent misrepresents their role to a buyer, leading the buyer to believe they have authority to make decisions on behalf of the seller, the buyer may rely on that perceived authority.

Understanding this distinction is crucial in real estate transactions, as it can influence the rights and responsibilities of all parties involved. Actual authority is rooted in explicit directives or implied permissions, while apparent authority relies on external perception based on how the agent presents