law-actual-and-apparent-authority | agency theory | nonsignatories | alter ego | respondeat superior

ACTUAL VS. APPARENT AUTHORITY (LEGAL CONCEPT)

Actual authority includes both express and implied authority and usually denotes the authority a
principal (1) intentionally confers upon an agent, (2) intentionally allows the agent to believe he
possesses, or (3) by want of due care allows the agent to believe he possesses. 2616 S. Loop
L.L.C. v. Health Source Home Care, Inc., 201 S.W.3d 349, 356 (Tex.App.-Houston [14th Dist.]
2006, no pet.); Lifshutz, 199 S.W.3d at 22. Actual authority is created through conduct of the
principal communicated to the agent. Lifshutz v. Lifshutz, 199 S.W.3d 9, 22 (Tex.App.-San Antonio
2006, pets. denied); Huynh v. Nguyen, 180 S.W.3d 608, 622-23 (Tex.App.-Houston [14th Dist.]
2005, no pet.).

Apparent authority arises through acts of participation, knowledge, or acquiescence by the
principal that clothe the agent with the indicia of apparent authority. Ins. Co. of N. Am. v. Morris, 981
S.W.2d 667, 672 (Tex.1998). Certain limitations apply in determining whether apparent authority
exists. Lifshutz, 199 S.W.3d at 22; Suarez, 35 S.W.3d at 272. First, apparent authority is
determined by looking to the acts of the principal and ascertaining whether those acts would lead a
reasonably prudent person using diligence and discretion to suppose the agent had the authority to
act on behalf of the principal. Lifshutz, 199 S.W.3d at 22; Suarez, 35 S.W.3d at 272. Only the
conduct of the principal may be considered; representations made by the agent of her authority
have no effect. Lifshutz, 199 S.W.3d at 22-23; Suarez, 35 S.W.3d at 272. Second, the principal
must either have affirmatively held the agent out as possessing the authority, or the principal must
have knowingly and voluntarily permitted the agent to act in an unauthorized manner. Lifshutz, 199
S.W.3d at 23; Suarez, 35 S.W.3d at 272. Finally, a party dealing with an agent must ascertain both
the fact and the scope of the agent's authority, and if the party deals with the agent without having
made such a determination, she does so at her own risk. Lifshutz, 199 S.W.3d at 23; Suarez, 35
S.W.3d at 272.

CASELAW FROM HOUSTON




CAUSES OF ACTION ELEMENTS | HOUSTON CASE LAW | TEXAS COURT OF APPEALS OPINIONS  

HOUSTON OPINIONS HOME PAGE