What legal protections do third parties have when dealing with agents?

Third parties dealing with agents are afforded protections under the concept of apparent authority. Apparent authority arises when a principal's behavior leads a third party to believe that the agent has the authority to act on the principal's behalf, even if the agent does not possess actual authority. This principle is particularly important because it protects third parties who may reasonably rely on the representations made by the agent based on their interactions with the principal.

When a principal allows an agent to act in a certain way, and a third party relies on the agent's representations or actions as if they are authorized, the principal may be bound by the agent's actions. This ensures that third parties are not left vulnerable when they engage in transactions, believing they are dealing with someone who has the necessary authority, even if that authority has not been explicitly granted or communicated.

In contrast, protections under the doctrine of real authority focus on the actual authority given to an agent by the principal, which does not necessarily safeguard third parties who may be misled by appearances. Similarly, protections against ambiguity in contracts deal with the clarity of the contract terms rather than third-party interests. Finally, ensuring that agents disclose their limits concerns the internal relationship between agents and principals rather than the external relationship with third parties.