It raises an estoppel because the third party is given an assurance, which he relies on and would be inequitable for the principal to deny the authority given.
The doctrine of apparent authority is based on the concept of estoppel, thus, it prevents the principal from denying the existence of agency to a third party, provided that a representation, as to the agent's authority, has been made by him to the third party either through his words or by his actions.
In Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 the director in question managed the company's property and acted on its behalf and in that role employed the plaintiff architects to draw up plans for the development of land held by the company.
[6] The acts of the company as principal must constitute a representation (express or by conduct) that the agent had a particular authority and must be reasonably understood so by the third party.
In determining whether the principal had represented his agent as having such authority, the court has to consider the totality of the company's conduct.
[9] In some circumstances, the very nature of a transaction would be held to put a person on enquiry.
[10] The rule in Turquand's case does not enable a third party to hold the company to an unauthorized transaction per se.