Which of the following correctly describes apparent authority?

Apparent authority refers to a situation where a party appears to have the authority to act on behalf of another party, based on the actions or conduct of the latter, even if that authority has not been explicitly granted. This type of authority arises from the perception created by the principal's behavior or representations to third parties.

In this context, the selection correctly highlights that apparent authority can be demonstrated through actions rather than through formal or explicit documentation. For instance, if a manager consistently allows an employee to negotiate contracts and their behavior leads third parties to believe that the employee has the authority to do so, then that employee may be seen as having apparent authority, even if no formal delegation of authority exists.

The other options imply different forms of authority that do not align with the concept of apparent authority. Written and explicitly granted authority pertains to actual authority, while requiring approval from a contracting division is more about regulatory or procedural authority. Lastly, authority implied through contract documentation can lead to misunderstandings about what has been authorized but doesn’t capture the essence of how apparent authority is derived from the perceptions and representations that the principal has created.