Chapter 4 : Agency
4.3.5 By Estoppel
A person cannot be bound by a contract made on his behalf without his authority. However, if he, by his words or conduct allows a third party to believe that a person is his agent even when he is not, and the third party relies on it, he will be estopped from denying the existence of that person’s authority to act on his behalf.
Example: If Mike tells Sam in the presence of Tom that Mike is Tom’s agent and Tom does not contradict this statement, Tom cannot later deny that Mike is his agent if Sam provided a room to Mike in his hotel, believing that Mike is Tom’s agent and booked the room for the business purposes, and later demanded Tom for the payment of the bill.
Freeman & Lockyer v Buckhurst Park Properties Ltd Facts: There were 4 directors in a company. One of them, ‘A’ contracted on behalf of the company with ‘T’ (3rd party) without any authority. The other directors knew about the contract, but not inform ‘T’ that ‘A’ actually had no authority to act. This induced ‘T’ to believe that ‘A’ had the authority to enter into a contract on behalf of the company. Held: The company is estopped from denying that ‘A’ is the company’s agent and from denying that ‘A’ had the authority to act on behalf of the company.
4.4
TYPES OF AGENT
The evolution of commercial practice, couple with the need for various functional classifications of agents, has resulted in the recognition of a number of different kinds of agents. Some of the common types of agents are: a) A broker b) A factor c) A commission agent d) A del credere agent e) Power of attorney 4.4.1 A Broker
Is an agent who is engaged to make contracts between two principals (as counter parties) engaged in trade, commerce or navigation. A partnership
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