Tuesday, April 24, 2012

Holding Out: the shingle theory

the core concept of agency law is the application of the shingle theory 0f holding out to the principal:

Hamilton Hauling, Inc. v. GAF Corp., 719 S.W.2d 841, 846 (Mo.App.1986):

The "holding out" of the agent's authority by the principal party may be by action or inaction. The principal may directly communicate the authority to a third party or knowingly permit the agent to exercise such authority. See Continental-St. Louis Corp. v. Ray Scharf Vending Co., 400 S.W.2d 467, 470 (Mo.App.1966). The Continental-St. Louis Corp. court quotes 3 AM.JUR.2d Agency § 74 (now § 79) as saying:
[T]he rule is that if a principal acts or conducts his business, either intentionally or through negligence, or fails to disapprove of the agent's act or course of action so as to lead the public to believe that his agent possesses authority to act or contract in the name of the principal, such principal is bound by the acts of the agent within the scope of his apparent authority as to any person who, upon the faith of such holding out, believes, and has reasonable ground to believe, that the agent has such authority, and in good faith deals with him.

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