What defines apparent authority in agency relations?

Apparent authority in agency relations refers to the power an agent appears to possess to act on behalf of a principal, based on the principal's representations to third parties. This type of authority arises when a principal creates an impression to others that the agent has the authority to engage in certain actions or make decisions that bind the principal.

When the agent acts within the scope of this apparent authority, third parties are allowed to rely on the impression created by the principal, even if the agent does not have actual authority to perform those actions. This is important for transactions and interactions, as it allows for trust and reliance between third parties and agents in business dealings.

The correct choice highlights that apparent authority is about the visible power an agent seems to have, regardless of whether it is genuinely granted by the principal. This distinguishes it from other forms of authority that have their origins rooted in formal agreements or legal mandates.

The other options do not capture the essence of apparent authority. For instance, authority derived from precedent does not specifically apply to the visibility or impression aspect of agency relationships. Authority given under duress involves coercion, which does not relate to the principal's representation of authority. Authority recognized by local statutes pertains to legal rights and responsibilities rather than the