ACCA Applied Skills · Corporate and Business Law (Global) · Agency law
Lena owns a shop. Her employee Omar has always ordered stock from Vantos Ltd with Lena's knowledge and she has always paid the invoices. Lena now tells Omar not to order from Vantos again, but does not tell Vantos. Omar orders stock from Vantos, which has no knowledge of the instruction. Is Lena likely to be bound by the order?
Lena is likely bound, because her earlier conduct in letting Omar order and paying the invoices represented that he had authority. Vantos relied on this without notice of the withdrawal, so Omar had apparent authority even though his actual authority had ended.
- ANo, because Omar's actual authority was withdrawn
- BNo, because agency by estoppel requires a written statement
- CYes, because Omar has implied actual authority from his employment
- DYes, because Lena's past conduct led Vantos to believe Omar had authority, creating apparent authorityCorrect
Explanation
Apparent authority arises where the principal represents, by words or conduct, that the agent has authority, and the third party relies on it. Lena's past conduct of paying invoices created this representation, and Vantos was not told otherwise. The first option is wrong because withdrawal of actual authority does not end apparent authority unless the third party is told.
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