AGENCY BY ESTOPPEL Meaning and
Definition
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Agency by estoppel is a legal concept that arises when someone leads another party to believe that a certain individual has the authority to act on their behalf in a particular matter, even though no formal agency relationship exists. In such cases, the party who creates this belief, known as the principal, is estopped from denying the authority of the individual whom they represent to have agency power.
The concept of agency by estoppel is based on the principle of fairness and preventing injustice. It is often invoked in situations where the actions or representations of the principal mislead a third party into reasonably believing that the individual in question has the authority to act as an agent.
For agency by estoppel to be established, several elements must be present. Firstly, the principal must create a belief in a third party that an agency relationship exists. This can be done through words, actions, or even silence when there is a duty to disclose the lack of agency. Secondly, the third party must reasonably rely on this belief, resulting in them changing their position or entering into a transaction. Lastly, the third party's reliance on the belief must cause them harm or loss.
In summary, agency by estoppel is a legal doctrine that holds a principal responsible for the actions of an individual who is believed to have authority to act on their behalf, even if no actual agency relationship exists. It aims to prevent unfairness and protect the rights of innocent third parties who relied on the representations made by the principal.
