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Abstract
This article traces the coming of apparent authority in the 18th and 19th centuries. Some confusion exists about the origins of this rule. It is often suggested that the doctrine has theoretical and historical roots in estoppel as an extension of actual authority. This article provides strong evidence that the apparent authority was-and should be thought of as-a true form of authority that grew out of developments in contract law rather than the rules of equity. This analysis contributes to the intellectual understanding of the history of commercial law and the law of agents.
I.Introduction
Agents pay a crucial role in coordinating transactions and connecting producer to consumer in today's markets. A significant development in Anglo-American law of agency came with the establishment of apparent authority in the 19th century. In his 1891 article on agency, Oliver Wendell Holmes, Jr. explained that "the obvious consequence of the principal's own conduct in employing an agent is that the public understand him to have given the agent certain powers."1 In this statement, Holmes explained the function of the doctrine of apparent authority. An agent acts with apparent authority when he or she transacts without the express authority of the principal, but the third party has a reasonable basis for assuming the agent has authority. Although this doctrine is well-documented, its intellectual and legal foundations have long been disputed.2 one strand of thinking links the origins of apparent authority to estoppel: as stated by Webb and Bianco, "if the principal, by words or conduct, represents or holds his agent out as having certain authority, he will be estopped" from denying that the agent had actual authority.3 A second view sees apparent authority as an independent class of authority. It ties apparent authority to the objective approach in modern contract law where the courts adopt the position of a reasonable person in order to interpret how others would have seen the intention of the parties.4 This article provides new insights into this debate as it traces the emergence of apparent authority back to its legal foundations.
The Anglo-American law of agents was forged in the 18th and 19th centuries by English judges and legal commentators; it was then adopted and revised by their American counterparts.5 We argue...