Lawgist237Liability of principal inducing belief that agent's unauthorized acts were authorized
When an agent has, without authority, done acts or incurred obligations to third persons on behalf of his principal, the principal is bound by such acts or obligations, if he has by his words or conduct induced such third persons to believe that such acts and obligations were within the scope of the agent's authority.
Illustrations
(a) A consigns goods to B for sale, and gives him instructions not to sell under a fixed price. C, being ignorant of Bs instructions, enters into a contract with B to buy the goods at a price lower than the reserved price. A is bound by the contract.
(b) A entrusts B with negotiable instruments endorsed in blank. B sells them to C in violation of private orders from A. The sale is good.
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- 226 Enforcement and consequences of agent's contracts
- 227 Principal how far bound, when agent exceeds authority
- 228 Principal not bound when excess of agent's authority is not separable
- 229 Consequences of notice given to agent
- 230 Agent cannot personally enforce, nor be bound by, contracts on behalf of principal
- 231 Rights of parties to a contract made by agent not disclosed
- 232 Performance of contract with agent supposed to be principal
- 233 Right of person dealing with agent personally liable
- 234 Consequence of inducing agent or principal to act on belief that principal or agent will be held exclusively liable
- 235 Liability of pretended agent
- 236 Person falsely contracting as agent, not entitled to performance
- 237 Liability of principal inducing belief that agent's unauthorized acts were authorized
- 238 Effect, on agreement, of misrepresentation or fraud by agent
