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Ostensible Agency

DEFINITION

Term that refers to the creation of an agency through implied actions of the principal, either through words or acts that make a reasonable party believe a party is an agent of the principal and in doing so causes them to perform a specific task.

EXPLANATION

Agency relationships can either be “actual or ostensible” (California Civil Code 2298). In other words, an agency relationship is either established or not. California Civil Code 2300 defines an ostensible agency as when the principal through actions causes a reasonable third party to believe another to be his agent.

Ostensible authority (or apparent authority) occurs when the actions and words of a principal and an agent convince reasonable third parties to believe that an agency relationship exists between the agent and principal. The agent in this situation is known as an ostensible agent.

Ostensible authority cannot be based on an agent’s conduct alone; there must also be evidence of conduct on the part of a principal that justifiably makes a third party believe that the agent is the principal’s agent.

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