Is a principal estopped from denying the agency relationship with an apparent agent acting within their scope?

The correct answer is true because a principal can be estopped, or legally prevented, from denying an agency relationship when the conduct of the principal leads others to reasonably believe that such a relationship exists. In cases involving apparent agents, the focus is on the actions and communications of the principal that create an impression to third parties that someone has the authority to act on the principal's behalf.

If a principal has created circumstances under which a third party reasonably assumes that an individual is acting as their agent, even if there isn't a formal or explicit agency agreement, the principal may be held accountable for the actions taken by that apparent agent within the scope of those assumed authorities. This legal doctrine exists to protect the interests of innocent third parties who rely on the appearance of authority.

This principle underscores the importance of how a principal presents their relationships and can serve as a critical factor in business dealings. It emphasizes that even in the absence of explicit authority, the principal's actions and inactions can lead to unintended legal consequences.