Which case is recognized for establishing the concept of apparent authority?

The concept of apparent authority is crucial in agency law and is established in the case of Watson v. United States. In this case, the court addressed the ability of an agent to bind a principal to third parties through the appearance of authority, even if that authority was not formally granted. The ruling emphasized that if a principal's conduct leads a third party to reasonably believe that an agent is acting with authority, the principal can be held liable for the agent's actions.

This case is particularly significant because it clarifies that apparent authority arises not from the agent's actual authority but from the perceptions created by the principal's representations or conduct. Such a principle ensures that third parties can rely on the actions and statements of agents who appear to have authority, which is essential for facilitating business transactions and protecting the interests of those who deal with agents.

This understanding is foundational in agency law, making Watson v. United States a key precedent in establishing the parameters around apparent authority and its implications for liability in agency relationships.