Agency by Estoppel

Agency by Estoppel means :

• The principal is prevented from contracting with the agent

• The principal is prevented from contracting with the 3rd party

• The principal is prevented from denying the liability upon the contract made by an unauthorised agent

• The principal is prevented from suing the agent

Agency by estoppel may happen if :

• The agent contracted without the knowledge of the principal

• The principal himself makes the 3rd party to believe that the unauthorised agent was having authority to contract on his behalf

• the agent himself inform the 3rd party that he is having authority to contract

• the 3rd party believed by himself that the agent is having authority to contract

In the case of Freeman & Lockyer vs Buckhurst Park Properties,

the principal company is bound to the contract with the 3rd party

because of the followings except :

• The directors aware and allow the 3rd party to contract with one of them even though without authority

• The directors induced the 3rd party to believe that the director whom he contracted with having authority to contract

• The directors / the company is estopped from denying the liability upon the contract

• The directors had expressly agreed to contract with the 3rd party

The second situation how an agency by estoppel may happen is :

• The principal failed to inform the clients or public that his agent has been terminated

• The principal prohibit his agent to contract

• The agent contracted without the principal's permission

• The 3rd party knew that the agent is a valid agent

The main effect of agency by Estoppel is ...

• The principal is bound to the contract with the 3rd party even though the agent was without authority

• The principal can sue the agent for acting without authority

• The 3rd party can sue the agent for acting without authority

• The agent is bound to the contract with the 3rd party even though without authority

In your opinion, is Dato Hisyam bound to the contract with Fadhli?

Under what grounds ?

• Yes. Because Fadhli himself went to Dato Hisham's office and paid the deposit

• No. Because Zarin has no authority to contract on behalf of Dato' Hisyam

• Yes. Because Dato Hisyam himself represented and induced his friends that they can contract through his nephew Zarin.

• No. Because Dato Hisyam has no knowledge about the deposit paid by Fadhli.