Question

6) Explain the difference between apparent authority and the concept of estoppel as they apply to the law of partnership.

Answer 1

First, let us go through the meaning of these respective laws:

Apparent authority is an agent's power to act on behalf of a principal even if the terms are specifically not stated or implied. This power comes into picture if a third party can reasonably infer, from the principal's conduct, that the principal granted this power to the agent.

Estoppel, on the other hand, is a legal principle that prevents a party from denying or alleging a certain fact which is derived from the party's previous allegation, conduct, or denial. The rationale behind estoppel is to prevent any kind of injustice owing to the inconsistency of fraud.

The main difference between apparent authority and the concept of estoppel is that estoppel can apply in cases where the claimant is not able to show any manifestation attributable to the asserted principle. Estoppel liability can arise for a principal from mere negligent failure like, not being able to protect against a misapprehension. It is noted that most of the situation that gives rise to apparent authority also give rise to the concept of estoppel.