Explain Creation of an Agency Relationship

Question

Explain Creation of an Agency Relationship?

Answer 1

Agency relationships arise in one of three ways:

a. Express authority (agency by express agreement): An oral or written contract appoints the agent and gives her specific authority to act on behalf of the principal.

b. Apparent authority (agency by conduct; agency by estoppels): No agreement exists, but the actions or statements of the principal give a third party a reasonable impression that the agent has authority to act on behalf of principal.

c. Ratification: There is no express or apparent authority, but a principal accepts a contract that was negotiated on his behalf without his authority.