Understanding Agency by Estoppel

The video tutorial explains the concept of agency by estoppel, where a principal is prevented from denying the authority of an agent if the principal's actions led a third party to believe the agent had such authority. It discusses legal implications, including a case study of Freeman and Lockyer, and highlights the consequences when a principal fails to inform a third party about the termination of an agent's authority. A practical example involving Zarin illustrates these principles in action.

What does the term 'estoppel' mean in the context of agency?

• To prevent a principal from denying an agent's authority

• To establish a new agency relationship

• To terminate an agent's contract

• To allow an agent to act freely

What is a key characteristic of agency by estoppel?

• It automatically terminates after a year

• It is based on the principal's actions or inactions

• It requires a written contract

• It is only applicable in employment relationships

Under what condition is a principal estopped from denying an agent's authority?

• When the principal has informed the third party of the agent's lack of authority

• When the agent has terminated the contract

• When the principal has led the third party to believe the agent has authority

• When the agent acts without any authority

How does agency by estoppel protect third parties?

• By holding the principal accountable for the agent's actions

• By allowing them to terminate the agent's authority

• By providing them with a direct contract with the principal

• By ensuring they are aware of all agent's actions

In the Freeman and Lockyer case, what was the main reason the company was estopped from denying the agent's authority?

• The agent had explicit authority from the board

• The other directors were unaware of the contract

• The third party was informed of the agent's lack of authority

• The directors allowed the third party to believe the agent had authority

What was the role of the board of directors in the Freeman and Lockyer case?

• They explicitly authorized the agent's actions

• They were unaware of the agent's actions

• They allowed the third party to believe the agent had authority

• They terminated the agent's contract

What is one effect of agency by estoppel on the principal?

• The principal is not liable for any contracts made

• The principal is liable for contracts made by the agent

• The principal can terminate the agent's authority without notice

• The principal can deny the agent's authority at any time

What happens if a principal fails to inform a third party about the termination of an agent's authority?

• The agent is free to act on behalf of the principal

• The principal is estopped from denying the agent's authority

• The third party is liable for any contracts made

• The agent's authority is automatically reinstated

In the practical example, why was the house developer estopped from denying the contract made by Zarin?

• Zarin was a legal agent of the company

• The developer explicitly told the third party about Zarin's lack of authority

• Zarin informed the developer about the contract

• The developer led the third party to believe Zarin had authority

In the practical example, what was Zarin's actual role in the company?

• A legal agent with full authority

• A third-party contractor

• A trusted employee without authority to contract

• A director of the company