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The doctrine of apparent authority as a precondition for sustainable business

Author

Listed:
  • Vaidas Jurkevičius

    (Mykolas Romeris University, Lithuania)

  • Vaidas Jurkevičius

    (Vilnius Gediminas Technical University (VILNIUS TECH), Lithuania)

  • Yuliia Pokhodun

    (Mykolas Romeris University, Lithuania)

Abstract

In the light of modern commercial relationships, the doctrine of apparent authority plays an important role in ensuring the sustainability of business. Where the business undertaking is a large and complex one, it would be difficult and inconvenient for a person or legal entity to communicate every transaction with the agent. Thus, an agent’s effective powers in dealing with third parties may extend to transactions that he was not authorized to undertake by the principal. Such situations are usually characterized as apparent authority. The difficulty with this type of authority lies in the lack of control on the part of the principal which entails certain questions of liability of either the agent or the principal. Even though the third party has to check the agent’s authority, he cannot know about all the details of the agent’s internal authorization. Therefore, there is always a risk that the agent was not authorized to act. This article is deemed to provide a comprehensive analysis of the doctrine of apparent authority from a comparative perspective. A conclusion is made that the doctrine is an efficient mean of apportioning the risk of liability for agent’s unauthorized act between the principal and the third party with individual factors determining who must bear liability it in every specific case.

Suggested Citation

  • Vaidas Jurkevičius & Vaidas Jurkevičius & Yuliia Pokhodun, 2018. "The doctrine of apparent authority as a precondition for sustainable business," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 6(2), pages 649-661, December.
    • Handle: RePEc:ssi:jouesi:v:6:y:2018:i:2:p:649-661
    DOI: 10.9770/jesi.2018.6.2(13)
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    References listed on IDEAS

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    1. Olga Finogentova & Vasiliy Tokarev & Mikhail Petrenko & Tatyana Primak, 2018. "Acceptance criterion of state coercion in contemporary society," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 6(2), pages 820-829, December.
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    Cited by:

    1. Anatoliy Kostruba & Farkhad Karagussov, 2019. "Legal Form Of Activity Of Legal Entities Of Corporation Type [Організаційно-Правові Форми Діяльності Юридичних Осіб Корпоративного Типу]," Post-Print hal-02377529, HAL.
    2. Jani KINNUNEN & Armenia ANDRONICEANU & Irina GEORGESCU, 2019. "The Role of Economic and Political Features in Classification of Countries-in-Transition by Human Development Index," Informatica Economica, Academy of Economic Studies - Bucharest, Romania, vol. 23(4), pages 26-40.

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    More about this item

    Keywords

    agent; unauthorized agency; apparent authority; manifestations of authority; estoppel doctrine; sustainable business;
    All these keywords.

    JEL classification:

    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • K20 - Law and Economics - - Regulation and Business Law - - - General

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