What principal condition must be satisfied for an Agency by Estoppel to arise?

For an Agency by Estoppel to arise, it is essential that the actions of the Principal lead a responsible third party to believe that the Agent has the authority to act on their behalf. This principle is grounded in the idea of fairness and preventing harm to third parties who rely on the apparent authority of the Agent. In situations where the Principal lends credibility to the Agent's authority through their conduct or representations, the Principal may be bound by the Agent's actions, even if the Agent does not have actual or implied authority granted directly by the Principal.

The concept of Agency by Estoppel helps ensure that individuals or entities are protected when they make decisions based on how a Principal has represented the Agent's authority. Hence, the key condition here is the appearance of authority created by the Principal’s behavior, which misleads the third party into believing that the Agent is authorized to act. This sets a standard of accountability for Principals regarding their representations and encourages them to be mindful of how they present their relationships with agents.