Which term refers to the legal accountability that arises when ostensible agency is present?

The term that refers to the legal accountability arising from ostensible agency is agency by estoppel. This concept occurs when a principal is held responsible for the actions of an agent, even when there is no actual authority given to that agent, because the principal’s conduct led a third party to reasonably believe that the agent had authority to act on their behalf.

In situations of ostensible agency, the principal may have behaved in a way that suggests to others that the agent has the authority to represent them. As a result, if a third party relies on this appearance of authority and enters into a transaction with the agent, the principal can be legally bound to honor that transaction. Agency by estoppel, therefore, prevents the principal from denying the agency relationship due to their own representations or lack of taking action to clarify the agent's actual authority.

The other terms do not accurately describe the legal accountability arising specifically from ostensible agency. Actual authority refers to the explicit or implicit authority given to an agent. Agency by necessity involves situations where an agent must act in the principal's best interest due to unavoidable circumstances. Agency by appointment relates to the formal decision made by a principal to appoint an agent. None of these terms encompass the legal implications of ostensible agency in the way