Discussing The System Of Agency By Estoppel

As an important civil and commercial law system, agency by estoppel is not onlya sign of maturity of agency system, which is also an important strategy to facilitatetransactions in order to achieve rapid economic development, based on benefit equitybetween the principal and the bona fides third party. However, given to thephenomenon of ostensible agency considering representation rights as true rights ofdisposal, which is inconsistent with common sense, thus led to the majordisagreement between theorist sand practitioners on the relevant rules of agency byestoppel system. Therefore, focusing on these differences, this article will give acomprehensive analysis, enabling people to have a clear grasp with rules of agency byestoppel. Based on this line, the following aspects will show a depth analysis foragency by estoppel:Chapter One: The system value and the nature of the agency by estoppel.As a system, agency by estoppel of course has its being value, however, thereflection of its value will inevitably be limited by the theoretical basis. Thetheoretical basis of ostensible agency is also considered as the relied legal basis whenlegislators draw up its rules, including the Rechtsschein theorie, principles of equityand trust protection principles, all of which laid a solid theoretical foundation foraccurate application of the ostensible agency system.In the level of system construction value, agency by estoppel is conducive to the maintenance and the strength of credit agency system, as well as making up thefunctional defects of agent system. Besides, it will offer an fair oppotunity to protectthe interests of both sides when balances the interest value between the principal andthe bona fide third party, finally achieving security and stability of the trading orderand promoting economic efficiency operation.For understanding the nature of agency by estoppel, scholars each presents anargument, but mainly divided into the right agency and narrow unauthorized agency.However, neither of these views gives a correct judgment from a comprehensiveperspective on the nature of the agency by estoppel. Actually, there is a fundamentaldifference between the agency by estoppel and the authorized agency, as well as thenarrow unauthorized agency. The essence of the agency by estoppel is the“generalized unauthorized agency”. That is to say, the nature of agency by estoppel isalthough lacking of granted power of attorney between the principal and theunauthorized agent, owning the same legal ability with the right agent, which is onlythe result of legal fiction.Chapter Two: Constituent elements analysis of agency by estoppel. Upon theunderstanding of elements of the agency by estoppel, as the principal fault is one ofthe requisites or not for the controversial point, there are two totally different views,that are,“single elements theory” and “dual elements theory”. They both have somemerits and disadvantages. As for assertions about constituent elements of agency byestoppel, though it sill goes for “dual elements theory”, however, except for theobjective existence of the requisites of the agency representation appearance, weshould turn the requisites of the principal’s fault to determining the principal by theprincipal of risk, thus will be more comprehensive. As well, it’s more reasonable tobring the relative third party’s non-fault into bona fides, without a separate list.