How Can Agency Be Created?

As a rule, any individual able to make or enter a contract is able to appoint an agent. Any person, even one who can not make a contract themselves, can be an agent, as far as binding a principal individual and another party individual or group is concerned. There are various ways in which agency can be created between parties.

An agency can be created via an express agreement, either written or orally, between two parties, namely principal and agent. If the agreement has been written, it could be sealed, as well. In addition, an agency may simply be implied as a result of conduct. For example, within a partnership, each partner is assumed to be the agent of the other. Another instance of assumed agency exists at a hotel, where guests assume that the reception clerk has the authority to accept and take charge of payments handed to him or her. Relationships can equally give rise to agency. A wife, for instance, can bind her spouse to make payments for articles she has purchased.

Another way in which agency may come about is through estoppel. This term is defined as such:

• If a party (A) has, either through language or conduct, given another party (B) reasonable cause to believe that things are in a certain state, and B acts upon this belief, then A is unable to deny that the state of things is as believed by B to any other party who has relied justifiably on his or her conduct or language.
• If, for example, B takes action as A's agent without A's knowledge, and A takes advantage of the action taken by B on finding out, then A is regarded as having ratified B's actions and can not subsequently deny the fact that B was acting as his agent.