Authority Flashcards
What is it and the different types
What is authority & what does it mean for an agent acting within this
The scope in which an agent is able to effect the legal relationship of his principal and a third party
A principal confers authority on it’s agent
- An agent acting within his authority will bind his principal to contract and create a binding agreement
All 4 types of authority
Express
Implied
Usual
Apparent (Ostensible)
Express authority
Where the principal specifically confers authority on an agent
**SMC ELECTRONICS v Akhter Computers
**
Sales person, but a called a director on company brochure but didn’t act as one. Was given a high automny by the company
Commission arrangement was held binding on the principal
“to do all things incidential to the post of head of sales”
Due to scope of his authority under his job title and wording in contract, held that he such authority to enter in to the contract with the third party
Implied authority
Based on the conduct of the parties, where an agent is assumed to have authorisation to negotiate/enter/finalise contracts with third parties
HELY HUTCHINSON V BRAYHEAD
Guarantee of £95,000 held binding on the principal
Chairman had entered contracts of a financial nature in the past which had gone unchallenged by the company. Was also able to act as managerial director previously
Usual authority
Authority to do acts which are accustomed or usual for the job/office position occupied by the agent
Watteau v Benwick
Pub manager instructed not to order cigars bur did.
Court took reasoning that the pub manager was acting within a usual authority as it was reasonable for an agent in that position to do
-bBrewery held liable to supplier of the cigars
Apparant authority
Where there is an illusion or appearance to third party that the agent has authority/ from the perspective of the third party it apperars that the agent has authority
Where principal holds out agent as if he has authority (which in fact does not exist) OR knowingly permits another to represent themselves as though they have authority and does not repudiate at relevant time (before contract is made/during negotiations)
Where third party relies on that representation by the principal and alters their postion to enter in the contract,/or makes a commitment in reliance of the representation it acts as a form of estoppel (legal principle). And prevents the principal from later arguing or asserting a right that contradicts what they earlier said or agreed by law
Racing UK v Doncaster Racecourse
- Chief executive negotiated televesion rights for horse racing, held to have apparent authority
It was held that a chief executive had apparent authority to enter negotiate and enter into a contract with the claimant company granting television picture rights for horse racing
WHERE AN AGENT HAS NO AUTHORITY… ?
Ratification (principle must have knowledge) or necessity can occur which will bind the principal
If an agent exceeds their authority …?
An agent who exceeds their authority may be sued by the third party for breach of an implied warranty of authority.
**Yonge v Toynbee **
Unknown to the solicitors, the client was of unsound mind and lacked capacity to instruct the solicitors to defend proceedings on his behalf.
This ended the agency relationship on the basis of insanity, but the solicitor continued to act on his behalf.
He was held liable for the costs of the legal proceedings since he had affirmed his authority (innocently) whereas he had none as he no longer an agent at all
What will the agent’s contractual relationship with the third party depend on ?
The agent’s contractual relationship with the third party will depend on whether the agent has discolosed or undisclosed the principal
What is an undisclosed principal and where this is one what happens
An undisclosed principal is one that has not been named, or does not inform the third party that he is acting on behalf of his principal
Where this an undisclosed principal both the agent and the principal MAY be held liable (jointly liable)
Jointly liable where the agent fails to inform the third party that he is acting on behalf of his principal
WHY CAN BOTH BE SUED ?
Keighly Maxsted v Durant
It’s based on commercial convenience eg. if both capable, …
What is disclosed principal ?
A disclosed principal is named/not named.
An agent is not liable on the contract which he brings aboout on the principal’s behalf and makes this known to third party AS the contract is between his principal and the third party (AGENT LEGALLY FALLS OUT)
