Agency law Apparent Authority. CPA Exam REG. Business Law

Apparent authority in agency law explained for the CPA exam REG section — this business law lecture covers how a principal's conduct can create apparent authority, why secret instructions don't limit it, general versus special agents, terminating authority through notice, and agency by estoppel. Professor Farhat helps CPA, CMA, and EA exam candidates and college accounting and business law students master high-search topics like "apparent authority agency law," "actual vs apparent authority," and "agency by estoppel." Try it free at farhatlectures.com — interactive exercises, lectures, simulations, cases, multiple choice, and AI tools for CPA, CMA, EA and students. Video Timeline & Key Concepts: 0:00 — Introduction: recap of actual authority and moving to apparent authority 1:26 — Definition of apparent authority based on third-party perception 5:02 — Why secret limiting instructions do not defeat apparent authority 7:05 — General agents versus special agents 8:36 — Terminating apparent authority through actual and constructive notice 12:10 — Agency by estoppel 15:56 — Practice question on ending apparent authority Frequently Asked Questions: Q: What is apparent authority in agency law? A: Apparent authority arises when a principal's words or conduct lead a third party to reasonably believe an agent is authorized to act for the principal, even if no actual authority was granted. It is based on third-party perception rather than internal agreements. Q: Do secret limits on an agent restrict apparent authority? A: No. Private restrictions a principal places on an agent, such as a spending limit, do not limit apparent authority toward a third party who is unaware of those restrictions. Q: How is apparent authority terminated? A: A principal must give notice to third parties. Actual notice is required for existing customers or partners, while constructive notice, such as a public announcement, is sufficient for potential future third parties. Q: What is agency by estoppel? A: Agency by estoppel occurs when a principal's negligence or inaction lets a third party reasonably believe someone is their agent. The principal is then prevented from denying the agency and may be bound by that person's actions. Q: Is firing an agent enough to end apparent authority? A: No. Simply terminating an agent internally does not end apparent authority. The principal must give proper notice to third parties, or the former agent may still bind the principal. #CPAexam #CMAexam #enrolledagentexam #accountingcourses #collegecourses #courses #REG #businesslaw #agencylaw #apparentauthority #agencybyestoppel #actualauthority #ProfessorFarhat #accountingstudents