Why can a principal revoke actual authority without ending apparent authority toward a third party?

A principal may revoke an agent's actual authority while apparent authority persists because the law seeks to protect third parties who rely on the principal's manifestations of authority rather than the private, internal limitations placed on the agent.1

The doctrine of apparent authority functions as a compromise to ensure that agency remains an efficient tool for commerce. Because a third party cannot always verify the specific details of an agent's internal authorization, they are often entitled to rely on the principal's previous declarations or the agent's position (such as an employee or partner) as evidence of their power to act.1

If a principal terminates an agent's real authority but fails to notify the third party, the agent may retain the external legal power to bind the principal, even though they lack the internal justification to do so. Ultimately, the law apportions the risk of such unauthorized acts between the principal and the third party based on individual circumstances, prioritizing the protection of those who reasonably rely on the appearance of authority created by the principal.12