Meaning
Apparent authority under German civil law arises when a principal repeatedly permits an unauthorized person to act on behalf of the business. This situation creates a duldungsvollmacht, where the principal is bound by the transactions of the agent because the third party relied on this tolerated behavior. Legal security in commerce requires that such apparent authority holds the same weight as explicit authorization.
Apparent Authorization
Toleration of representative actions forms the legal basis of this concept. When a principal remains silent despite knowing that another person is concluding contracts in their name, a duldungsvollmacht becomes established. This acquiescence creates a protective shield for innocent business partners who assume the agent possesses genuine authority.
Reliance Protection
Security of transactions depends on the objective appearance of authority. If the third party knows or should have known that the agent lacks authority, the protective effect of a duldungsvollmacht disappears. This reliance doctrine maintains a balance between the commercial freedom of the principal and the security of the market.
Legal Consequence
Binding contractual obligations emerge for the principal as though they had granted formal power of attorney. This outcome prevents the principal from later denying the contract by claiming the agent acted without consent.
