Agency Primary Sources 2 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 Fraser [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.
