What does apparent authority mean for a supplier?

Apparent authority refers to a situation where a supplier believes they have the authority to act on behalf of another party based on the previous interactions, communications, or behavior of that party. This concept is rooted in the idea that the principal (the party granting authority) must take responsibility for the actions of the agent (in this case, the supplier) if those actions are justifiable under the perceived authority.

When a supplier operates under the assumption that they have the necessary authority due to consistent past dealings, this aligns with the definition of apparent authority. The supplier's understanding is shaped by the actions and representations made by the principal, leading them to reasonably believe that they can proceed based on that belief. The underlying principle is that if the principal has created this perception through their conduct, they could still be held accountable for the supplier’s actions, even if formal authority was never granted.

This understanding is important, especially in the procurement process, as it helps clarify the risks and responsibilities involved in contractual relationships and decision-making.