Which agency is created by law when ostensible agency is determined, to hold the agent or principal legally accountable for actions performed on the principal's behalf?

Which agency is created by law when ostensible agency is determined, to hold the agent or principal legally accountable for actions performed on the principal's behalf?

• A. Ostensible Agency
• B. Agency by Estoppel
• C. Agency by Ratification
• D. Agency Coupled With Interest

Answer: (B)

Agency by estoppel is created by law when ostensible (apparent) agency is present. When a principal’s actions lead a third party to believe an agent has authority to act on the principal’s behalf, the law imposes liability to prevent the principal from denying that relationship. This mechanism holds the agent or the principal accountable for the agent’s actions performed on behalf of the principal, even if no formal agency agreement exists. The other forms don’t fit this scenario: agency by ratification happens only after the principal approves the agent’s unauthorized acts; agency coupled with an interest involves an agency kept in place because the agent has a personal interest in the subject matter; ostensible agency describes the appearance of agency, but the liability mechanism that binds parties is agency by estoppel.

Agency by estoppel is created by law when ostensible (apparent) agency is present. When a principal’s actions lead a third party to believe an agent has authority to act on the principal’s behalf, the law imposes liability to prevent the principal from denying that relationship. This mechanism holds the agent or the principal accountable for the agent’s actions performed on behalf of the principal, even if no formal agency agreement exists. The other forms don’t fit this scenario: agency by ratification happens only after the principal approves the agent’s unauthorized acts; agency coupled with an interest involves an agency kept in place because the agent has a personal interest in the subject matter; ostensible agency describes the appearance of agency, but the liability mechanism that binds parties is agency by estoppel.