Agency by estoppel prevents a principal from denying the existence of an agency relationship when their conduct led others to believe it existed. It protects third parties who relied on the apparent authority in good faith.
A broker introduces his assistant as "my associate who handles all my sales." A buyer works with the assistant believing she is an authorized agent. Even if the assistant had no formal authority, the broker is estopped from denying the agency because his words created the appearance of authority.
Agency by estoppel is created by the PRINCIPAL's conduct, not the agent's. The principal fails to correct a false impression. Compare with agency by ratification (principal approves unauthorized acts after the fact).
Related Terms
Related Concepts
A legal relationship in which one person (the agent) is authorized to act on behalf of another person (the principal) in business transactions with third parties.
The highest legal obligation of trust and confidence owed by an agent to their principal, requiring the agent to act solely in the principal's best interest.
A situation where a single agent or brokerage represents both the buyer and the seller in the same real estate transaction.
An arrangement where a brokerage assigns separate agents within the firm to represent the buyer and seller in the same transaction, allowing each client to have dedicated representation.
A non-agency relationship where the broker facilitates a real estate transaction without representing either party, owing limited duties of honesty, fairness, and competence to both.
Frequently Asked Questions
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