Question

What is agency by estoppel? What is apparent authority in agency law? Give three examples of corporate law principles or issue upon which it has an influence and discuss that influence.

Answer 1

Agency by estoppel and apparent authority are concepts in agency law that deal with the authority of agents acting on behalf of principals. They can influence contract relationships, tort liability, and corporate governance in corporate law.

Step-by-step explanation:

Agency by estoppel: Agency by estoppel is a legal concept in agency law that arises when a principal acts in a way that leads others to believe that someone is their agent, even if that person is not actually their agent. In these cases, the principal is estopped, or prevented, from denying the agency relationship. An example of agency by estoppel is when a store owner allows an employee to handle cash transactions, leading customers to believe that the employee has the authority to act as the store's agent.

Apparent authority: Apparent authority refers to a situation in agency law where a principal, by their actions or words, leads another person to believe that an agent has the authority to act on their behalf, even if the agent does not actually possess that authority. An example of apparent authority is when a company gives an employee a company credit card to make purchases, creating the appearance that the employee has the authority to enter into contracts on behalf of the company.

Examples of corporate law principles or issues influenced by agency by estoppel and apparent authority include:

1. Contractual relationships: In corporate law, third parties may enter into contracts with an agent based on the belief that the agent has the authority to act on behalf of the principal. If the principal later claims that the agent did not have the authority, agency by estoppel and apparent authority may be invoked to enforce the contract.
2. If an agent causes harm to a third party while acting within the apparent scope of their authority, the principal may be held liable for the agent's actions. The principles of agency by estoppel and apparent authority can therefore impact tort liability in corporate law.
3. The principles of agency by estoppel and apparent authority also play a role in the governance of corporations. Directors and officers may have apparent authority to act on behalf of the corporation, and shareholders may rely on the actions and representations of these individuals in making decisions about the corporation.