An Agency Agreement Can Be Created by Estoppel

At the beginning of this chapter, I mentioned that „apparent authority is based on the behavior or words of the principal…” ». Example: If A B says that C has authority, then A abolishes authority without saying B, then C clearly has obvious authority, but no real authority. If C B says that C has the power to act for A, if C has never struck A, then C has no apparent authority. A maxim of agency law is that an agent cannot create his own authority. But what if A B`s behavior has led B to believe that C has authority when C actually has none? Here, the boundaries between apparent authority and ability to act are blurred by lawful confiscation. In the case of the burnt cotton and in the case of lawyer Madnick, the agent is primarily responsible for the false appearance of authority, but the client has put him in a position to give that false appearance. Therefore, the customer is held responsible. However, the doctrine of apparent authority confirms the agent`s action vis-à-vis the third party; but this does not necessarily make it valid vis-à-vis the agent himself, who can be held liable to his client for breach of his obligations if the breach is not waived[12] In other words, a person or company cannot allow another person to „not officially represent them” and reap the benefits, but if something goes wrong, pretend that there was no agency relationship to deny the apparent agent`s actions or obligations. The practical application of government confiscation is explained in the following cases:Britania`s case:[34] Mr. Kahai, a government official, entered into a contract with Britania on behalf of the government. Under the terms of the contract, the State of Orissa was obliged to reimburse the VAT paid by Co. G K Das, J. If an unapproved provision is included in the treaty and there is no ratification by the government, the government is not bound by such an agreement.

Agency by estoppel is a legal term that refers to someone who gives a layman the impression that he is a representative of another person or company. This agency is not officially appointed and the agent through Estoppel is not authorized to represent the person or company for which he claims to work. A client and a representative may expressly agree to enter into an agency relationship. The agreement may be concluded orally or in writing. The procuring entity need only delegate to the representative the power to act on its behalf. The purpose of the agency relationship must be lawful. The Agency shall have the express authority granted in the agency contract and the implied power to carry out tasks related to that objective. The courts may presume that an agency relationship arose between the unauthorized physician and the hospital.

It is „generally accepted that the government should not be arrested under the same conditions as any other party to the process.”[33] The reasons for limiting government forfeiture (government estoppel) are: (1) sovereign immunity; (2) the theory of the separation of powers, according to which certain judicial conclusions on the responsibility of the State are inappropriate; (3) the lack of reasonable confidence in the person who seeks to let off steam because of the limited scope of the powers of government officials; (4) the increased importance given to public interests rather than private interests in order to justify confiscation; (5) the desire to limit potentially enormous liability; (6) protect the free dissemination of government information; and (7) the fear that an estoppel rule could be used by government officials acting in consultation with private parties to deceive the government. In the world of insurance, where everyone must be licensed and associated with an insurance broker, problems arising from the agency through Estoppel are quite common. In this world, estoppel often occurs when the insurer or its agent (your insurance advisor) deceives the insured into believing that coverage existed where it does not actually exist. Estoppel agency means that a defendant in a dispute acknowledges that a third party acted as its representative, which led the plaintiff to deal with the third party based on the belief in the existence of an agency relationship. The principle of estoppel is linked to the principle of least avoidance. For example, if A learns that B is trading with C on its behalf and does not take steps to clarify its position, A would be responsible for the transaction made by B on its behalf. However, according to the general principles of contract law, A cannot be held liable because there is no generality between A and C. However, since A is the least expensive avoidor, as it can avoid the error cheaper than C, it is responsible for the resulting damages. As already mentioned, customary law generally does not impose liability for non-performance, but only for misconduct, for example in the absence of a rescue obligation. It can be argued that the law does not prescribe liability for the assistance of others, that its position on the agency may be justified by legal confiscation taking into account the difficulty of setting limits for the party cooperating with the agent, and that the alleged client is best placed to avoid damage, and it is usually not difficult to determine, which was reasonable for him.[21] Estoppel is a concept of customary law of tort and evidence, not contract. Another way to create apparent authority may arise from the client asking the agent to misinform the third party about the agent`s authority.[22] In addition, an agent cannot bind a principal by making the third party believe that he has authority.[23] These characteristics make it even clearer that the guiding idea is the principle of least cost avoidance, not contractual theories.

Let`s look at an example of an agency through Estoppel to further illustrate the concept. Unlike other sources of liability, estoppel has two peculiarities. First, third-party recovery is limited to losses caused by the customer`s inability to prevent the error, not expected damage. Strictly speaking, the customer`s failure to make an ineffective agreement a contract; it only makes the customer liable for damages. If the third party does not trust, recovery is not possible. Second, it is a one-way street. The third party may claim damages from the customer, but the customer may not enforce the contract against the third party (unless it is declared valid by ratification). The burden of proof that the third party relied on the customer`s conduct rests with the party invoking such conduct.[24] If a third party reasonably relies on an agent`s assurance that it is authorized to act on behalf of the principal, the principal may be bound by the agent`s actions. In general, the client must or must not act in a way that reasonably leads a third party to believe that an agency relationship exists, even if there is in fact no agency. The estoppel agency is based on the principles of fairness. It would be unfair to discriminate against a third party who has reasonable grounds to believe that the officer has the authority to act in the name of the principle and that the principal is the source or cause of that belief.

The concept of power of action by estoppel arises when a person acts in such a way that the other person considers that a third party is authorized to act on his behalf and enters into a transaction with the third party, the person whose act led him to do so is responsible for this agreement as if the third party had acted on his behalf. It is based on the principle of natural justice and equality. Any representative acting outside his sphere of employment binds the principal by his acts, if these acts have been perceived as others, in order to be under the apparent authority of the agent in all cases where the principle has led the third party to believe that the acts fall within the scope of his powers[1]. It is also necessary that the third party acted after this representation of the customer. However, this is the Indian legal situation, according to which an already existing relationship of an agency is necessary for the agency`s doctrine to be applicable by estoppel. According to the agency`s common law understanding of forfeiture, the existence of an agency is not a necessary condition. Only the incentive to believe in one`s existence is required. Kind.

21 of the American Restatement on Agency, Third gives a broader view of the principle by adding that fundamental liability would arise independently of the agency`s previous termination […].