agency

agency by estoppel

Agency by estoppel arises when a principal's words or conduct lead a third party to reasonably believe someone is the principal's agent, and the third party relies on that belief. The principal is then prevented, or estopped, from denying the agency. It is closely related to ostensible or apparent agency. No written agreement exists; the relationship is created by the principal's actions and the third party's reliance.

Exam tip
Compare: ratification is approval after the fact; estoppel arises because the principal let others believe an agency existed. Neither starts with an express agreement.
Example
A seller repeatedly lets a friend negotiate with buyers on her behalf. A buyer relies on the friend's statements, and the seller cannot later claim the friend lacked authority.

Related terms & state variants

Sources

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Last verified: 2026-10-23