Objective Theory of Agency: Apparent Authority and the Estoppel of Apparent Ownership

The purpose of this study is to reconsider the theoretical foundations of the liability of a principal to third parties in contract. In order to reconcile the extended liability of the principal for unpermitted contracts of his agent beyond traditional apparent authority, the treatise writers have created new generalized concepts. The conclusion of this study is that new conceptual generalizations to advance the theoretical framework of the law of principal\u27s liability in contract are not only unnecessary but misleading. The basis of this conclusion is that new concepts with more general and indeterminate content than the older ones seem to be created to rationalize the imposition of contract liability with little or no recognition of the primary rule that both contract and estoppel to deny contract in agency are based on manifestations of consent by the principal. A valid operational or functional analysis of the principal\u27s liability in contract in each case can be made by utilizing the traditional concepts of authority and estoppel. The structural elements of such a functional theory of agency contracts are suggested in this review of leading English and American decisions