When a principal allows a licensed agent to act in a way where a third party believes that the license holder is the principal's agent.

When a principal allows a licensed agent to act in a way where a third party believes that the license holder is the principal's agent.

• A. Express Agency
• B. Implied Agency
• C. Ostensible Agency
• D. Apparent Agency

Answer: (C)

This scenario illustrates ostensible (apparent) agency. It occurs when the principal’s conduct leads a third party to reasonably believe the licensed agent has authority to act for the principal. Even if there is no actual authority or explicit agreement, the principal’s actions create the appearance of authority, and the principal is bound by the agent’s actions within that appearance if the third party reasonably relies on it. Express agency would require a formal agreement, and implied agency arises from the parties’ conduct between the principal and the agent, not from the third party’s belief. Here, the key factor is the third party’s reasonable reliance on how the principal presents the agent.

This scenario illustrates ostensible (apparent) agency. It occurs when the principal’s conduct leads a third party to reasonably believe the licensed agent has authority to act for the principal. Even if there is no actual authority or explicit agreement, the principal’s actions create the appearance of authority, and the principal is bound by the agent’s actions within that appearance if the third party reasonably relies on it. Express agency would require a formal agreement, and implied agency arises from the parties’ conduct between the principal and the agent, not from the third party’s belief. Here, the key factor is the third party’s reasonable reliance on how the principal presents the agent.