Agency Relationship

Question 1

By Act of Parties

Answer 1

Parties may create an agency by agreement between the principal and agent (that is, actual authority). Parties may also be bound in an agency relationship through holding out by the principal (that is, apparent authority), or ratification

Question 2

By Operation of Law

Answer 2

Estoppel
An agency may be created through estoppel. Estoppel is virtually the same as apparent authority (see 3.1.3, infra) in that it requires third-party reliance on the principal’s communication.

By Statute
Statutes creating agencies are usually designed to accomplish a limited purpose (for example, statute appointing secretary of state as out-of-state motorist’s agent for service of process for damages arising from driving in-state).