Most merchantable transactions are not conducted by the parties themselves, but through agents vested with the authority to act for them. Agency is a special kind of contract creating an obligation between the principal and an agent under which each acquires certain rights and liabilities, and its object is the creation of legal relations between the principal and third persons. An agent maybe an employee of his principal, as where a firm employs salesmen or buyers, or the agent maybe an independent contractor such as an estate agent. A contract made with a third party by the agent in...
been restrictions on the agent's authority and he oversteps them he will be liable to his principal. For apparent authority to arise three ingredients must be present: 1 a representation 2 a reliance on that representation and 3 an alteration of his position resulting from such reliance. The representation will only be binding on the principal if it is made by him or by his agent on his behalf. In principal, a third party is usually required to rely on an agent's representation and if the situation is not suspicious he is not required to enquire any further.