Australian Commercial Law

Running head: Australian Commercial Law
Australian Commercial Law
System04128

Australian Commercial Law
Table of Contents
Question 1.............................................................................................................................................2
Question 2.............................................................................................................................................3
Bibliography..........................................................................................................................................5
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Australian Commercial Law
Question 1
What is ostensible and estoppel?
The terms ostensible and estoppel is linked with each other in the contract and agency law.
Under section 126(1) of Corporations Act, the ability to cause restricting contracts can be
held by a person who is acting after the company has given him/her the authority to represent
them. The person who is acting on behalf of the company will be known as “Agent”. There
are two kind of authority namely, actual and apparent. The apparent authority is known as
‘ostensible authority’.
Apparent authority, is lesser than actual authority. This involves an agency relationship being
made through the presence of power presented on the agent. There is no requirement of
agreement between company and the agent. When a normal person believes that the person
have the authority and he was representing the company to act then it can be said that the
agent is having ostensible authority. This relies upon the conditions which offer ascent to the
exchange being gone into. For apparent authority to exist, the accompanying must happen:
 a portrayal to the next contracting party that the individual implying to follow up for
the organization's sake has specialist
 this portrayal must originate from the organization itself, or from somebody who has
genuine specialist;
 the other contracting individual more likely than not depended on the portrayal.
 there is a farthest point on clear expert in that an individual with evident specialist
cannot concede further expert on any other person.
An organization, much the same as an individual, can express to third person that someone
else has a specific degree of power. In the event that the third person ends up mindful of the
portrayal and, acting sensibly, executes business with the evident specialist on its confidence,
the organization will be estopped from denying the portrayal. Here the doctrine of estoppel
will apply. The company cannot refuse the representation made by ostensible agent. The
individual held out by the organization will be treated as having had apparent specialist.
The need for giving force to contracts created by agents stems from the fact that the third
parties are not aware of whether the agent has ostensible authority or not. Further, the nature
of this authority is such that the third party believes that such agent holds the required power
to transact the contract on behalf of the principle. Hence, to safeguard the third party, it
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