Actual authority exists when the corporation expressly authorizes the officer to take action on behalf of the corporation.
Apparent authority derives from the officer's corporate position.
A third party is entitled to rely on the apparent authority of an officer even if the officer lacked authority to take action, so long as the third party did not have actual knowledge of the lack of authority. If neither actual nor apparent authority is present, the corporation will not be bound by the officer's action. To ensure that contracts are binding on a corporation, the other party to the contract must insist that the individuals signing the contract on behalf of the corporation have authority to do so. Neither a resolution of the board of directors nor other evidence of actual authority is necessary if two officers in these positions execute the contract on behalf of the corporation. In many cases it may be impractical to have these two officers execute a contract.