Agency relationships are formed in the following ways:
·By express agreement – either in writing or by verbal agreement.
·By implied agreement – for example it is implied that a partner is a partnership is an agent of the firm.
·By ratification – retrospective authority may be granted by a principal for the actions of an agent, however this does not give the agent the same powers in the future.
·By necessity – in rare situations an agent may appoint themselves to deal with an emergency. As long as they act reasonably the principal must indemnify the agent.
·By estoppel – when an agent acts with ostensible authority the principal may be estopped from denying the agents’ authority to have acted on their behalf. Agents may acquire authority in the following ways:
·Actual express authority – the principal may define the agents powers in writing or verbally.
·Actual implied authority – where a third party is accustomed to dealing with an agent the agent may acquire implied authority, such customary authority was highlighted in Watteau v Fenwick.
·Ostensible/apparent authority – where an agent holds themselves out to have certain powers, and the purported principal is aware of this and fails to take reasonable action to prevent this the principal may be estopped from denying the agent’s authority to bind in contract per Freeman & Lockyear v Buckhurst Park Properties. |
