It’s really important that a dealer’s employees’ roles are defined, what they’re allowed to do is defined, and that the dealer is making sure that the employee is not doing things or representing to a customer that the employee can do more than the employee can actually do. Watch this video to learn more about the two different types of authority, actual and apparent authority, and how the difference between them can impact you.
Below is a transcript of the video:
We’re going to talk about something that can get a little confusing for dealers and really any business owner, and that’s authority. I’m talking about two different types of authority, apparent authority and actual authority. Authority, when it’s used in the case of apparent versus actual authority, I’m talking about the authority of an employee or a dealer employee to do something on behalf of the dealer.
Actual authority would be if the employee actually has the authority to do that thing. Apparent authority is in the case of a customer, where the customer believes that the employee has the authority to do something that they did. That’s considered apparent authority. Sometimes it may be that the dealer says later on “this guy was acting way out of the scope of his employment. He didn’t have the authority to do that. He couldn’t enter into that agreement. He couldn’t make that price change. He couldn’t say those things to the customer.” But to the customer, this person had every piece of authority they needed to do that. That’s called a parent authority where the customer believes that the employee had the authority to do the act that the employee did. In certain circumstances, a lot of circumstances, really, the dealer is on the hook for something that the customer believed the employee had the authority to do, even if the employee didn’t actually have the actual authority to do it. But instead, based on the customer’s interpretation of that authority, had what we would call apparent authority.
It’s really important that a dealer’s employees’ roles are defined, what they’re allowed to do is defined, and that the dealer is making sure that the employee is not doing things or representing to a customer that the employee can do more than the employee can actually do.
For more videos on the Georgia Car Law Authority series, please visit www.georgiacarlaw.com.
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