Agency 1: Authority

Definition of Agent

Montgomerie v UK Mutual Steamship: agent drops out of contract.

Bradgate (2005) “essence of an agency contract leis in agent’s power to alter principal’s legal position”

The Queen v Kane: agent is anyone who acts on behalf of another

Bradgate (2005) difficult to define, but a person recognised by law as to be able to alter the legal rights/obligations of another is an agent.

How agency arises

• Express/implied actual authority
• Apparent authority
• Operation of law (necessity and SGA s48(3))
• Ratification

Can be consensual, or contractual (involving consideration and obligations)

Necessity

Conditions

• P’s property in A’s possession as a result of the contract
• A unable to obtain instructions (Ireland v Livingston)
• There was an emergency
• A’s actions were in good faith, commercially reasonable, proportionate and in the interest of P

Ratification

Koenigsblatt v Sweet: ratification is seen as antecedent authority, this means deemed to have taken effect at the time of the acceptance of contract by A. Can be express or implied.

Authority

Actual authority: express or implied

Consequences: There is a contract between P and T. A drops out of the contract. A is entitled to any remuneration so contracted (Montgomerie)

Authority is limited by things expressed or implied, unless A acts with ‘apparent authority’.  A can claim for indemnity for expenses incurred.

Carac Grain v Faure

• The essence of agency is the element of consent
• Consent must be expressed/implied by words and conduct.
• Observation: the courts will tend to look at wording of contract. “if what they have agreed to amounts in law to an A-P relationship, it is valid even if they later professes to disclaim it.”

Pole v Leask: no one can become an agent of another except by the will of that person.

Hely Hutchinson v Brayhead:  The defendant company allowed one of its directors to act as the Managing Director and to give instructions to the Plaintiff to do work on its behalf. (similar facts to Freeman v Lockyer).

• Facts: The fact that A was never formally appointed did not matter. This is implied when inferred from conduct and acceptance of other directors.
• A is authorised to do all things that fall within the usual scope of his office
• This does not prevent A having apparent authority.

MacIntyre (2008): Lord Denning said that ‘apparent authority is authority of A as it appears to other. It often coincides with actual authority’, so creates some confusion regarding the overlap.

Patel v Standard Chartered:

• If instructions were vague, A must contact P before making a bona fide interpretation
• The question is not whether A’s interpretation was reasonable, but whether A has behaved reasonably upon acting on that interpretation.

Implied Authority

Rosenbaum v Belson

• Authority to sign document
• Implied to mean all necessary and incidental things to do so

Brigant v Banque du Peuple: agent with authority to buy and sell goods did not have authority to borrow money.

Freeman v Lockyer: implied by circumstances

Hely-Hutchinson: usual authority

(Liverpool trade customs case, look up name): if custom in a certain market dictates that contracts can be entered by A in his own name and still binds P, A has implied actual authority to do so. Custom must be ‘well known’ and ‘notorious’ (check).

Apparent Authority

Apparent authority may coincide/exceed/exist independently of actual authority (Hely-Hutchinson). In this case there was a co-incidence. Authority implied by position (usual), and authority as it appears to the world at large by position (apparent).

Apparent authority exceed actual authority

Goode (2015), for example, A is made MD but instructed to only conduct commercial agreements within a financial limit, and T not aware of this. P is bound by apparent authority by way of position to T.

Apparent authority exists outside actual authority

Summers v Saloman: A acted as P’s agent for 20 years. Agency terminated, but P failed to notify those who previously dealt with A as agent of P. P bound.

Ratification

• A must have intended to act on behalf of P
• Purported agency must be revealed to T before concluded
• T believes A has the authority to ct for another
• P is competent to enter into the contract at the time of ratification
• Ratification is within reasonable time.

Consequences: Bolton Partners v Lambert:

• Facts: Football clubs refused to employ youth footballers, but coach (A) took them in anyway. Club did not object further, entered into no contracts, but did pay the youths monthly. Ratification is implied
• Effect: puts parties in a position as if P had authorised consent from the outset (or the time of the conclusion of the contract).

Rights and Liabilities of agents

Undisclosed agency: T does not know that A is acting on behalf of another.

Disclosed agency: T knows this, but does not necessarily know the identity of the P.

P’s right to sue and be sued

• P’s rights to sue and be sued are the essence of a contract of agency
• This depends (apart from apparent authority) on the preceise ambit of A’s actual authority this is for courts to decide. Camillo Tank Steamship v Alexandria: “approve meant that A had authority to agree on debt for P, as if P had been on the spot”.

Unless:

Jardan v Norton: T had notice of A’s lack of authority

Jacobs v Morris: T had constructive notice of A’s lack of authority

Comeford v Brittanic Assurane Co: wher a has no authority to act, acts outside scope of authority do not bind.

Modifications

Negotiable instruments. Bills of Exchange At 1882 s23 ➔ no person is liable for a Bill of they did n sign it.

• S91(1) but it is sufficient that signature is of a person under his authority

Deeds ➔ authorisation has to be by deed

Land ➔ authorisation must be in writing  by s.. LPA 1925

Liabilities of Agents and Disclosed P’s where A has undertaken a personal liability

A is normally not liable, but where he has taken on a personal liability both A and P are liable.

Foxtons v Thesleff: there no principle which states that parties may not contract on the explicit basis that the agent is also liable.

Montgomerie v UK SS: A can be liable where liability is expressly contracted. E.g. deed is inter-partes (between the parties, so A is named).

Debenhams v Perkins: Where both are liable, they have alternative liability up until the point T elects to have legal relations with only one of them.

Barrington v Lee: This is an unclear area.

Middle East Tankers v Abu Dhabi Containers: election requires the unequivocal display of intention by the T. Here T issued writs for payment of goods to both P and A because he was unsure who he was dealing with. P become insolvent. Held that T can still elect to claim from A. (A would be entitled to restitution of costs from existing funds of P’s insolvent execution subject to priority issues).

Settlement of T’s liabilities with A of a disclosed P

General rule is that P and T cannot discharge their liabilities by settling with A as A is not privy o the contract. Exceptions

Irvine v Wyattson: T led P to think liability is discharged by A.

Butwich v Grant: A has special authority to receive sums on behalf of P.

Undisclosed Agency

What is an undisclosed agency?

Teheran Europe v Belton Tractors: Where A contracts with actual authority i) intending to do so on behalf of P, ii) no disclosing identity of P iii) or revealing this existence … it DOES NOT MATTER IF T is willing to leads A to believe that T is willing to treat any principal that A might be acting for as a party to a contract.

This is an assumption for an “ordinary commercial contract” unless stipulate otherwise.

Greer v Downs: actual notice by the T is required to exclude the doctrine of undisclosed principal.

Oystertech v Barker: Whether A has a private arrangement with P is no business to the outside world. It is entitled to treat him as principal, but if the real P emerges T has to accept that.

Munday (2008) this is an unusual assumption in law of agency.

Rationale: K&M v Durant

• This is to reflect the real situation, even if in form it does not look like that.
• Agents are commonly used to advance business efficacy, so it is only reasonable to impose an agency relationship to reflect reality.

Browning v Provincial Insurance Co: T can thus elect to sue P instead of A.

Siu Yin Kwan v EIC: P can intervene to ensure that the contract is made on his behalf by A. The rules are as follows:

• Undisclosed P can sue or be sued if A has acted within his actual authority at the time of entering the contract. (followed in Welsh Development Agency v Export Finances)
• A intended to act on behalf of P
• Any defence T has against A is also applicable against P
• A’s liabilities are not automatically extinguished (double-check)
• This is subject to any express stipulations or implied circumstances to the contrary.

National Oilwell v Daisy Offshore: must prove intent.

Watteau v Fenwick: must ascertain scope of authority.

Excluding factors: T only deals with A, no agency

• Terms expressly exclude it (Siu Yin Kwan), can be by parol evidence (Eastcheap)
• No intent to act on behalf of anyone (Teheran v Belton)
• T makes it clear that he only wants to deal with A (Said v Butt, but criticised)
• The terms impliedly exclude it (Humble v Hunter)

Said v Butt: The fact that T does not want to deal with anyone but A centres around the importance of personality of A to him. Look up situations:

• Non disclosure of P: Dyster v Randall and Sons
• Positive deception as to A dealing as principal: Archer v Stone

Legal effects of undisclosed agency

This depends on whether the identity of P is revealed, and whether T elects to be bound to P instead of A.

Muldoon v Wood: Third parties has a right to elect between A and P.

Borries ve Imperial Ottoman Bank: Defences available by T against both.

Settlement

• It is sufficient that T settles with the A of the undisclosed P. Coates v Leeves
• Likewise, the undisclosed P can settle with A (Armstrong v Stokes). This is so that the T cannot claim monetary payment for services/goods supplied from both A and P (Irvine v Watson).