Which party has the belief that an agent has the right to act under apparent authority?

The belief that an agent has the right to act under apparent authority primarily resides with the customer or third party. Apparent authority arises when a principal, through their actions or statements, leads a third party to reasonably believe that an agent has the authority to act on their behalf. This means that if a third party interacts with an agent who appears to have the necessary authority, they are entitled to assume that the agent can perform tasks within that scope of authority.

For example, if an insurance company allows an agent to represent it and that agent engages in behaviors that suggest they can enter into contracts or make decisions for the company, a customer or third party may reasonably rely on those actions. The concept of apparent authority protects the interests of third parties by holding the principal accountable for the representations made by their agents, thereby facilitating smoother business transactions.