3. (b) That's right. An agent has an apparent right to dispose of goods if the principal gives the agent possession of the goods or the documents of title to those goods, together either with an apparent right to deal with them, or apparently as owner of them. In such circumstances, the principal will be estopped from asserting that the agent had no actual authority to dispose of them.

An example of this is enshrined in the provisions of the relevant state and territory sale of goods legislation (e.g. section 67 of the Goods Act 1958 (Vic)). It says that if a principal puts goods or documents of title in the hands of a mercantile agent then, because mercantile agents usually have the authority to deal with the goods in their possession, the situation constitutes a representation by the principal to third parties that the agent has the right to dispose of those goods and the principal cannot later deny the agent's authority to sell them. In the present case, because A left his car in the possession of a car salesman, together with the ownership papers, A would be estopped from denying the salesman's authority to deal with the car.

NOTE: In some states, the sale of goods legislation states that if an agent, acting without authority, disposes of the principal's goods in an open market, in accordance with the usages of that market, and the third party acquires the goods in good faith (openly and honestly) and without any notice of the agent's lack of title or authority to sell, then the buyer obtains a good title to those goods as owner.