Agency Primary Sources Flashcards
Hely-Hutchinson v Brayhead [1968] 1 QB 549
Case: Chairman, who acted as de facto managing director of company, signed for company to guarantee a loan without Board approval. Although he did not have implied authority to do so by nature of his office, he did by the circumstances of the case, including -
(1) acted as the de facto managing director
(2) Chief Executive who made all final decisions on financial matters
(3) Board often retrospectively approved of contracts by by him
There was a failure to make T aware of restrictions on A’s authority.
Rule: Actual authority can be implied from the conduct of the parties and the circumstances of the case. This requires the court looking closely at the circumstances of the case.
(Also, perhaps ‘usual authority’ that when Board appoint one of their number to be managing director they impliedly authorise to do so whatever comes with scope per Lord Denning).
Quote: ‘It is implied when it is inferred from the conduct of the parties and the circumstances of the case such as when the board of directors appoint one of their number to be managing director. They thereby impliedly authorise him to do all such things that fall within the scope of that office.’ per Lord Denning
Freeman & Lockyer v Buckhurst Park Properties [1964] 2 QB 480
Case: K and H (As) form a company (P) and despite power to appoint a managing director, they do not. K makes a contract with F (T) without actual authority. K had no actual authority to bind P but had apparent authority.
Rule: Actual authority is a usual contract between P and A. Apparent authority is a legal relationship between P and T, created by representation (this is a weak form of estoppel):
(1) Representation made by P to T, intending for T to rely on it
(2) Made by the person with actual authority
(3) T induced
Representation may be made by conduct of allowing A to act in some way.
Quote: ‘A legal relationship between the principal and the [third party] is created by a representation, made by the principal to the [third party], intended to be and in fact acted upon by the [third party], that the agent as authority to enter on behalf of the principal into a contract of a kind within the scope of the ‘apparent’ authority, so as to render the principal liable to perform any obligations imposed upon him by such contract… The representation, when acted upon by the [third party] by entering into a contract with the agent, operates as an estoppel, preventing the principal from asserting that he is not bound by the contract. It is irrelevant whether the agent had actual authority to enter into the contract.’
Hough v HB Clifford & Sons [1982] Ch 374
Rule: Where P has expressly instructed A not to act in a particular way, there is no implied actual authority.
ING Re (UK) Ltd v R&V Versicherung AG [2006] All ER 342
Quotes:
‘The doctrine of apparent authority is based on estoppel by representation where a principal (P) represents or causes it to be represented to a third party (T) that an agent (A) has authority to act on P’s behalf, and T deals with A as P’s agent on the faith of that representation, P is bound by A’s acts to the same extent as if A had the authority which he was represented as having.’ per Toulson J
‘… where P represents or causes it to be represented to T that A1 has authority to represent to T that A2 has authority to act on P’s behalf, and T deals with A2 as P’s agent on the faith of such representations, P is bound by A2’s acts to the same extent as if he had the authority which he was represented as having.
‘ … The critical requirement is that A2’s authority must be able to be traced back to the principal by a representation or chain of representations upon which T acted and whose authenticity P is estopped from denying by his representation through words or conduct.’ per Toulson J
Egyptian International Foreign Trade Co v Soplex Wholesale Supplies Ltd, The Raffaella [1985] 2 Lloyd’s Rep 36
Case: A bank guaranteed cargo and when the cargo was found to be defective, S sought to enforce the guarantee. The evidence was sufficient to show apparent authority.
Rule: In determining apparent authority, the court should consider all of P’s conduct, not just the usual authority for the particular type of A (although this is a relevant factor for the court to consider).
Armagas v Mundogas, The Ocean Frost [1986] AC 717
Case: Ar purchased a ship to lease back to M. Employee (Mg) of M says he has authority to sign 3 year charterparty. M believes that he has signed a 12 months charterparty. Ar sues M for breach of 3 year charter agreement. Mg had no actual or ostensible authority and no specific authority to notify A that M had give authority.
Decision: T was unable to demonstrate that P had represented that A had actual authority to enter into 3 year charter party; it was known that A lacked actual authority and T could only show that it had entered into the transaction through misguided reliance on what the agent himself had represented
Rule: It is very unlikely for their to be a case where A does not have general authority to enter into transactions but by reason of circumstances created by P, has specific authority.
Lord Keith explained that the agent’s apparent authority is usually general in character, and will arise when P has placed A in a position that, in the outside world, is generally regarded as carrying authority to enter into transactions of the kind in question
First Energy (UK) v Hungarian International Bank [1993] 2 Lloyd’s Rep 194
Case: J (without authority to sign particular document) mistakenly thinks that HIB has given authority and sends letter to FE declaring that HIB will send the loan when FE signs certain documents. On the particular facts of this case, J was ‘clothed with ostensible authority’ to communicate that the head office approval had been given for the faculty i.e. by appointing J has senior manager, the bank represented that A had apparent authority. If he had himself authorised the loan then no authority as had told FE he could not sign it himself.
Rule: There are some ‘rare cases’ where A can communicate whether or not he has authority, this is where they are ‘clothed with ostensible authority’ to communicate a decision to T.
Thanakharn Kasikorn Thai Chamkat (Mahachon) v Akai Holdings Ltd (No 2) [2010] HKCFAR 479
Case: A bank’s liability to pay compensation to a company turns on whether A had apparent authority to bind the company.
Decision: Once T has established A has apparent authority, it would be unusual for reliance to not be presumed.
Difficult to conceive of a circumstances where an alleged agent, with no actual/apparent authority, can acquire apparent authority simply by representing to T that they have such authority. The court must be satisfied that P gave A apparent authority to make the representation in question, and such a representation must be clear and unequivocal.
Rule: In the absence of dishonesty or irrationality, reliance will normally be presumed
Kelly v raser [2012] UKPC 25, [2013] 1 AC 450
Case: F’s transfer of funds from pension scheme signed by trustees of another ILI pension scheme, money is transferred and invested. The operation would never have worked if A did not have authority to write letters to inform contributors that they had been duly accepted. Just as a company secretary must communicate board decisions.
Rule: Someone may have ostensible authority by virtue of their position to bind P and T.
China-Pacific SA v Food Corpn of India, The Winson [1982] AC 939
Rule: Agency of necessary does not extend to cases where there is some intervention and a subsequent claim for reimbursement; there is distinction between true necessity case and cases where there is some intervention and a subsequent clam for reimbursement.
Keighley Maxsted & Co v Durant [1901] AC 240
Case: R purchased wheat from D; R contracts in own name with the (unexpressed) intention of contracting jointly on his behalf and that of K. K agrees with R to take the wheat jointly. When R refuses to take delivery from D, K is not found to be liable as R had not purported to act on K’s behalf.
Sin Yin Kwan v Eastern Insurance Co Ltd [1994] 2 AC 199
Case: Court orders company to pay compensation for killed employees. Company is wound up and PRs of deceased claim against insurer. Successful as:
(1) there was nothing in the contract excluding P’s right to be sued.
(2) If company could claim against the insurer as undisclosed principle then PRs of deceased can claim against insurer under relevant statutory provisions
Rules:
(1) An undisclosed P may sue or be sued on a contract made by A acting within the scope of his actual authority;
(2) A must intend to act on P’s behalf;
(3) A of the undisclosed P may also sue and be sued on the contract;
(4) Any defence T has against A is also available against P;
(5) Contract may exclude P’s right to sue and be sued.
The contract itself; or the circumstances surrounding the contract, may show that A is the true and only principal.
Said v Butt [1920] 3 KB 497
Case: S wanted to attend the theatre, was not allowed to use ticket that A had purchased on his behalf as there was no contract between S and the theatre.
Rule: P cannot intervene in contract as A’s personality mattered to T.
Yonge v Toynbee [1910] 1 KB 215
Case: Solicitors where liable for T’s costs as they had warranted to T that they had A’s authority, when in fact he had been declared of unsound mind (solicitors not aware).
Rule: Agency terminates where P declared of unsound mind and warranty of authority to be paid to T if continue to warrant to act for P, regardless of knowledge.
Hatton Farms v Nimmo [2003] EWCA Civ 68, [2004] QB 1
Case: N claimed to act on behalf of W for purchase of racehorse from H but N has no authority. Purchase agreed in October, N not to sell horse to another buyer. Horse falls in in November and dies in December. Held that N is liable for the contract price of the horse.
Rule: Market value (at time of contract) is not deducted from damages for breach of warranty of authority.
SEB Trygg Liv Holding AB v Manches [2005] EWCA Civ 1237, [2006] 1 WLR 2276
Case: Solicitors purport to act for OAR but company has ceased to exist; rights and liabilities have been transferred to AMB. OAR named, upon instruction to solicitors, in arbitration proceedings. Solicitors are not liable for warranty of authority.
Rule: Solicitors give no warranty as to the accuracy of his instructions from P generally, including the name of the client.
Chaudry v Prabhakar [1989] 1 WLR 203
Rule: Where contract gratuitous no contract but agency relationship. A has an implied duty to exercise care, skill and diligence only in tort.
Bristol and West BS v Mothew [1998] Ch 1
Rule: Fiduciary has obligation of loyalty -
- Good faith
- Must not profit from trust
- Avoid conflicts
- Must not act for own or T benefit without P’s permission
Not exhaustive list
Mahesan S/O Thambiah v Malaysia Government Officers’ Co-op Housing Society Ltd [1979] AC 374
Case: T says bribe to A for purchase of land from a housing society and the society consequentially suffers a loss. P wants to claim for both (a) the amount corresponding to the crib AND (b) the loss it suffered, but is only allowed by the court to claim these alternatively.
Rule: P can chose to recover -
(1) The amount o the bribe
(2) Damages for the tort of deceit
FHR European Ventures LLP v Cedar Capital Partners LLC [2014] UKSC 45, [2015] AC 250
Case: A receivers a bribe, the bribe is held on constructive trust for the benefit of P.
Rule: Bribes paid to A are held on constructive trust for the benefit of P.
Rama Corporation Ltd v Proved Tin and General Investments Ltd [1952] 2 QB 147
Rules:
- P, or someone authorised by him, must represent to T that A has authority. Must be a representation of fact/law to be made by words/conduct or implied by pervious dealings. Confirmed by HL that representation must come from P: Rama Corp. Ltd v Proved Tin
- T must have relied on the representation
- T must alter position, not necessarily to his detriment. Seems to be satisfied by entering into the contract itself: Freeman & Lockyer
Quote: ‘Ostensible or apparent authority… is merely a form of estoppel, indeed, it has been termed agency by estoppel and you cannot call in aid an estoppel unless you have three ingredients: (i) a representation, (ii) reliance on the representation, and (iii) an alteration of your position resulting from such reliance.’ per Slade J
Koenigsblatt v Sweet [1923] 2 Ch 314
Rule: If A cats n the name of P without authority, P may ratify the act meaning the act becomes ratified ab initio
Quote: ‘Once you get a ratification it relates back; it is equivalent to an antecedent authority: mandate priori aequiparatur; and when there has been ratification the act that is done is put in the same position as if it had been antecedently authorised.’ per Lord Sterndale MR
Smith v Henniker-Major & Co [2002] EWCA Civ 762
Rule: Ratification is an all-or-nothing principle. Therefore, P who ratifies only part of a transaction will be held to have ratified the whole.
Quote: ‘A party wishing to ratify a transaction must adopt it in its entirety.’ per Robert Walker LJ
Humble v Humble (1848) 12 QB 310
Case: A entered into charterparty on behalf of an undisclosed P and signed the document indicating A was the owner of the ship. P sought to intervene in the contract but was unsuccessful because A, but signed as owner, had impliedly indicated that there was no P.
Rule: A may be considered the P by implied contract term
Clarkson Booker Ltd v Andjel [1964] 2 QB 775
Rule: If P is undisclosed, T is entitled to sue A as soon as contract is made and entitled to sue P as soon as P revealed. Once T has unequivocally elected to sue A or P, T can only sue that one. Issuing of proceedings is strong evidence of election which can be rebutted by circumstances.
Montgomerie v United Kingdom Mutual Steamship Association [1891] 1 QB 370
Rule: Generally A cannot sue or be sued on the contract (unless A accepts personal liability in the contract)
Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 10
Rule: Remuneration for A available if term in agreement, which can be implied by court but is unlikely where agreement is silent.
Thacker v Hardy (1878-79) King’s Bench Division
Rule: An indemnity is available to A to cover expenses, losses and liabilities reasonably incurred executing duties under actual authority, unless expressly agreed against.
Adamson v Jarvis [1827] 4 BING 66
Rule: P’s duty to indemnify A might also arise in cases where A is liable in tort.
Turpin v Bilton (1843) 5 Man & G 455
Case: A failed to fulfil P’s instructions to insure ship. When ship was destroyed, A was held liable for P’s loss.
Rule: In return for payment A undertakes to carry out P’s instructions (bilateral contract).
Supply of Goods and Services Act 1982, s.13
Rule: Where A performs service in the course of business, duty to exercise care, skill and diligence is implied.
John McCann & Co v Pow [1975] 1 All ER 129
Rule: Where P expressly/impliedly authorises use of a sub-agent, P is bound by sub-agents actions. Otherwise P not bound (but can ratify).
Solley & Others v Wood [1862] 16 Beav 370
Rule: Use of sub-agent allowed if usual practice in the trade/profession and neither unreasonable or inconsistent with the terms of A’s contract with P.
Quebec and Richmond Railroad Co v Quinn (1858) 12 Moo PC 232
Rule: Use of sub-agent allowed if the nature of the agency requires that it be performed either wholly or partly by a sub-agent.
Aberdeen Railway Co v Blaikie Brothers [1854] UKHL 1
Rule: A must avoid situations where his personal interests conflict, or possibly conflict, with his duty to P.
Boardman v Phipps [1966] UKHL 2
Rule: A must not, without P’s consent, use P’s property to secure a profit for himself, nor use information/knowledge for his own benefit which has has acquired by virtue of his position.
Mouat v Clark Boyce [1992] 2 NZLR 559
Rule: A should disclose any potential conflict to P so that P may permit.
Imageview Management Ltd v Jack [2009] EWCA Civ 63
Rule: A secret profit is made where A, whilst acting for P, receives some profit over and above that agreed with P. A is not allowed to accept commission from T without P’s approval.
Hippisley v Knee Brothers [1905] 1 KB 1
Case: Auctioneer paid reduced trade rate to advertise P’s goods but charged P the full non trade rate, therefore breach of fiduciary duty not to make a secret profit.
Rule: When awarding damages to P for A’s breach of fiduciary duty, the court will take account of the circumstances of the agent’s breach. If the breach is of a minor or technical one (such as this) then the four tis likely to order A to account to P for the profit wrongly made.
However, where A’s breach of fiduciary duty os fraudulent, then the court will take a more serious view. This can be seen from AG for Hong Kong v Reid where it was held that the property that was purchased using money obtained from bribery was held on trust for the principal who was also entitled to dismiss the agent.
Turner v Burkinshaw (1867) 2 Ch App 488
Rule: A has a duty to keep and maintain accurate accounts and show P on request
Lupton v White (1808) 15 Ves 442
Rule: Failing to maintain proper accounts puts A’s own funds at risk as there is a presumption that monies A cannot account for as his own belong to P.
Yasuda Fire & Marine Insurance Co of Europe Ltd v Orion Marine Insurance Underwriting Agency Ltd [1995] QB 174
Rule: P’s request for accounts survives the termination of the agency agreement.
Campanari v Woodbury (1854) 15 CB 400
Rule: Agency automatically terminates on death of P, and even if A is unaware, cannot fulfil agency agreement and collect requisite commission.
Boughton v Knight (1873) LR 3 P & D 64
Rule: Agency automatically terminates when A is unable to comprehend the nature and character of the acts P requires of him.
Drew v Nunn (1879) 4 QBD 661
Rule: Agency automatically terminates when P lacks mental capacity.
Quote: ‘Where such a change occurs as to the principal that he can no longer act for himself, the agent whom he has appointed can no longer act for him’
Marshall v Glanvill & Another [1917] 2 KB 87
Rule: Where agency agreement is embodied in a contract, certain intervening events may frustrate the contract. These events include those that would render performance of the contract impossible or illegal.
Waugh v H.B Clifford & Sons (1982) 1 ALL ER 1095
Rule: A solicitor or counsel retained in an action has an implied authority as between himself and his client to compromise the suit without reference to the client, provided that the compromise does not involve matter ‘collateral to the action’; and ostensible authority, as between himself and the opposing litigant, to compromise the suit without actual proof of authority, subject to the same limitation; and that a compromise does not involve ‘collateral matter’ merely because it contains terms which the Court could not have ordered by way of judgment in the action.
N.B. These are not so much rules of law but observations of general practice, and over time practice can change:
• New business methods
• Technological advances
Mundy notes - dominant view today has changed, so it is doubtful that the notion that not accepting implied authority would be ‘officious on the part of the plaintiff’s solicitor to demand to be satisfied as to the authority of the defendant’s solicitor to make the offer’ due to developments in communication meaning a solicitor would unlikely exercise such authority and it would unlikely be consider unduly importunate for such inquires to be made
Dey v. Pullinger Engineering Co. [1921] 1 KB 77
Case: Court held that a person was entitled to take a bill drawn by a managing director (without board authority). Bray J - the third party cannot be expected to know about what goes on in the company’s boardroom, and it would make people very shy about dealing with such bills otherwise.
N.B. These are not so much rules of law but observations of general practice, and over time practice can change:
• New business methods
• Technological advances
E Hannibal & Co Ltd v Frost (1988) 4 B.C.C. 3
Case: It is not within the usual authority of a managing director to have authority to bribe the representative of another company in order to obtain work for his principal.
N.B. These are not so much rules of law but observations of general practice, and over time practice can change:
• New business methods
• Technological advances
Howard v Sheward R. 2 C. P. 148 (1866)
Case: A horse-dealer with authority to sell a horse was also impliedly authorized to warrant the soundness of the horse.
N.B. These are not so much rules of law but observations of general practice, and over time practice can change:
• New business methods
• Technological advances
Mardorf Peach & Co v Attica Sea Carriers Corp of Liberia (The Laconia) [1977] AC 850
Case: ‘It was not within the banker’s express or implied authority to make commercial decisions on behalf of their customers by accepting or rejecting late payments of hire without taking instructions’.
N.B. These are not so much rules of law but observations of general practice, and over time practice can change:
• New business methods
• Technological advances
The “Unique Mariner” [1978] 1 Lloyd’s Rep 438
Case: Brandon J: “The implied actual authority of a master, unless restricted by such instructions lawfully given, extends to doing whatever is incidental to, or necessary for, the successful prosecution of the voyage and the safety and preservation of the ship.” In this case it included accepting tug boat assistance when the ship was stranded. and implied actual authority of the master of a stranded ship was not limited to his accepting them subject to the ordinary maritime law of salvage but extended to accepting such services on the terms of any reasonable contract.
N.B. These are not so much rules of law but observations of general practice, and over time practice can change:
• New business methods
• Technological advances
Rule: T cannot be expected do know of secret restrictions.
Rosenbaum v Belson (1900) 2 Ch 267
Case: In the absence of express authority to sell, it is settled law that even when the vendor has told the agent the price at which he is prepared to part with his property, an estate agent has no implied authority to sell the principal’s land.
N.B. These are not so much rules of law but observations of general practice, and over time practice can change:
• New business methods
• Technological advances
Overbrooke Estates Ltd v Glencombe Properties Ltd [1974] 3 All ER 511
Case: In the absence of contrary agreement, it is accepted that an auctioneer is usually entitled to do a number of things without his principal’s express authority, such as to describe the property he is charged to sell (Smith v Land and House Property Corp) and, in the case of personal property, to receive payment of the whole price.
N.B. These are not so much rules of law but observations of general practice, and over time practice can change:
• New business methods
• Technological advances
Payne v Lord Leconfield (1882) 51 LJQ B 642
Case: It is well understood that in the absence of express authority an auctioneer does not usually have the authority to engage in certain activities, such as warranting the property he is selling without the vendor’s consent, or negotiation the sale of property by private contract if the auction chances to have proved abortive (Marsh v Jelf)
N.B. These are not so much rules of law but observations of general practice, and over time practice can change:
• New business methods
• Technological advances
Stag Line v Board of Trade (1950) 83 LI. L Rep. 356
Rule: If the existence of content of a custom is contested, precise proof is required that the custom binds people operating within the particular commercial setting.
Drexel Burnham Lambert International NV v El Nasr [1986] 1 Lloyds Rep 356
Rule: Devlin J stressed that ‘custom’ in this context is not simply to be equated with what is customarily done within a particular market e.g. may be custom to make contract on A4 paper with double spacing, not doing this custom will not making the contract invalid – what has to be shown is by evidence is that the practice is recognized as imposing a binding obligation.
Cunliffe-Owen v Teather & Greenwood [1967] 1 WLR 1421
Rule: ‘Usage’ must be a practice which the court will recognise (which is a mixed question of fact and law) -
o Usage must be certain – clearly established
o Usage must be notorious – so well known in the market in which it is alleged to exist that those who conduct business in that market contract with the usage as an implied term
o Usage must be reasonable
per Ungoed- Thomas J
Wiltshire v Sims (1808) 1 Camp 258
Case: A broker was authorised to sell P’s stock, but the broker did not sell it in the usual manner instead taking a promissory note (on credit). A was acting without authority and P was not bound to sell the stock.
Rule: Authority given in general terms is construed to mean authority to act in the usual way.
Ireland v Livingstone (1872) LR 5 HL 395
Rule: ‘If a principal gives an order to an agent in such uncertain terms as to be susceptible of two different meanings, and the agent bona fide adopts one of them and acts upon it, it is not competent to the principal to repudiate the act as unauthorized because he meant the order to be read in the other sense of which it is equally capable.’ per Lord Chelmsford
European Asian Bank AG v, Punjab and Sind Bank (No. 2) [1983] 1 WLR 642
Rule: Robert Goff LJ thought some limits should be put on the operation of the unambiguous interpretation principle. A who relies upon his own interpretation of an instruction must have acted reasonably in all the circumstances in so doing. This may impose on A a duty to seek clarification of ambiguous instructions which obviously, or which the agent ought to have realised, are ambiguous (consider time and modern technology).
Barrett v Deere (1828) Moo
Case: By having someone say outside counting house, collecting payments, they had apparent authority to bind P.
Rule: A representation may imply that A has authority when not actually an agent.
Quote: “The debtor has a right to suppose that the tradesman has the control of his own premises, and that he will not allow persons to come there and intermeddle in his business without his authority.” per Lord Tenterden
OBG Ltd v Allan [2005] QB 762
Rule: Mance Lj suggested that may be apparent authority where contract of A not finalised, so not employee, but appointment had been prematurely announced at trade press.
Drew v Nunn (1879) 4 Q.B.D. 661
Case: Where T deals with A, without knowledge of P’s insanity, then P is bound by the contract. If both P and T are innocent, the person making the misrepresentation should bare the loss.
Rule: P may allow his agent to continue to appear as A after the agency has terminated.
Todd v Robinson (1884) 14 QBD 739
Rule: A representation may imply that A has greater authority.
Manchester Trust v Furness [1895] 2 QB 539
Rule: There is an absence of constructive notice in Agency.
R v Secretary of State forthe Home Department, ex p Harrison [1988] 3 All ER 86
Case: H wrote letter to company saying L (as agent) could apply for shares in H’s name if H did not apply after certain date, H had stipulated to L that had to be done by particular day (which was not done) but company unaware, so CA held that, because the brewery company was unaware of the private restriction on L’s authority, the company could rely upon the writing of which they had knowledge and that H was estopped from denying that L had unrestricted authority to apply for the shares in H’s name
Summers v Solomon (1857) 7 E B 879
Case: A, had on several times made jewellery orders from T; A left the shop, terminating the agency, and purported to order jewellery from T and absconded with the jewellery; P was liable to T.
Rules: Representation may be implied by previous dealings between the parties.
Quote: “As soon as you have given the agent authority to pledge your credit, you render yourself liable to parties who have acted upon notice of such authority until you find the means of giving them notice that the authority is determined.” per Compton J
United Bank of Kuwait v Hammoud [1988] 1 WLR 1051 cf City Trust Ltd v Levy [1988] 3 All ER 418 (joint appeal)
Case: Solicitors had apparent (usual) authority to transfer funds with security.
Rule: What falls within “usual” authority is a question of fact.
Quote: Lord Donaldson expressed that in determining whether a representation has been made as to a solicitor’s authority, provided that third parties known that the agent is a solicitor, as he claims to be, they are entitled to assume that that solicitor is of good character and someone whose statements “do not require that degree of confirmation and cross-checking which might well be appropriate in the case of statements by other who are not members of so respected a profession”; therefore banks, knowing that A is a practicing solicitor with established firm, entitled to assume the trust of what they stated unless alerted to the fact that the contrary might be the case – there was nothing to alert them.
Note: Dubai Aluminium Co Ltd v Salaam (2001), Aldous, J reflected on the extent to which the role of solicitors has changed over the decades: “Decisions of judges as to what was in the ordinary business of a particular partnership may not be of guidance as to what was the ordinary business of another partnership.” E.g. solicitors now may provide full range of financial services, did not in 1890 – answers depends on the facts
Houghton & Co v Nothard Lowe & Wills Ltd (1928) AC 1 HL
Case: No “usual” authority where A, acting without authority, entered into an agreement with the plaintiff fruit brokers on behalf of P whereby the brokers would sell on commission all fruit imported by P and whereby they would also be entitled to retain the proceeds of sale as security for debt owed by another company.
Kreditbank Cassel GmbH v Schenkers Ltd [1927] 1 KB 82
Case: No “usual” authority where A (branch manager of P), without authority, fraudulently drew seven bills to the order of P, purporting to do so on P’s behalf; T, a company with whom A had an interest, accepted the bills. P refused to honour the bills and T sued P as drawers.
Sea Emerald SA v Prominvestbank Joint Stockpoint Commercial Industrial & Investment Bank [2008] EWHC 1979
Case: The judge did not find on the evidence that it was within the ordinary scope of a regional office of a major commercial bank to provide commercial guarantees. It was not sufficient for the buyer to contend that it was within the ordinary scope of the authority of the main regional office of a major commercial bank, and so of the appointed head of the main regional office, to provide commercial guarantees. Something more specific was required: namely, the buyer had to establish – in this case, by specialized expert evidence – that it was within the ordinary scope of their authority to provide a refund guarantee.
Note: Compare to First Energy
British Bank of the Middle East v Sun Life Assurance Co of Canada (UK) Ltd [1993] BCLC 78
Rule: HL upheld the principle that an agent can have apparent authority to make representations as to the authority of other agents, provided that his own authority can finally be traced back to a representation by the principal or to a person with actual authority from the principal to make it.
Criterion Properties v Stratford UK Properties [2004] UKHL 28, [2004] 1 WLR 1846
Quote: ‘If a person dealing with an agent knows that the agent does not have actual authority to conclude the contract or transaction in question, the person cannot rely on apparent authority … And if a person dealing with an agent knows or has reason to believe that the contract or transaction is contrary to the commercial interests of the agent’s principal, it is likely to be very difficult for the person to assert with any credibility that he believed the agent did have actual authority.’ per Lord Scott
Hierarchy of the cases
HL – Armagas
CA – First Energy
PC – Kelly v Fraser
Therefore, follow Armagas unless it can be distinguished
CA normally bound, in civil matters, by its own previous decisions
Farquharson Bros & Co v King & Co [1902] AC 325
Rule: The representation must be made to a particular individual who says he relied on it, or under such circumstances of publicity as to justify the inference that he knew of it and acted upon it
