Source: https://it.b-ok.org/book/3561760/53d3a6
Timestamp: 2019-12-15 08:37:44
Document Index: 450517659

Matched Legal Cases: ['ewca ', 'EWCA ', 'UKPC ', 'EWCA ', 'EWCA ', 'EWCA ', 'EWCA ', 'EWCA ', 'UKSC ', 'EWCA ', 'UKSC ', 'UKHL ', 'UKSC ', 'UKSC ', 'UKHL ', 'EWCA ', 'EWCA ', 'EWCA ', 'EWCA ', 'EWCA ', 'UKHL ', 'CJEU ', 'EWCA ', 'EWCA ', 'EWCA ', 'EWCA ', 'EWCA ', 'art.4', 'EWCA ', 'EWCA ', 'EWCA ', 'EWCA ', 'EWCA ', 'EWCA ', 'EWCA ', 'EWCA ', 'EWCA ', 'art.6', 'Arts\n139', 'UKSC ']

Chitty on Contracts with Second Supplement | Hugh Beale | download
Pagina principale Chitty on Contracts with Second Supplement
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The 32nd Edition has now been updated; the first supplement covers all the latest development in contract law since publication of the main work.
Covers every eventuality
Updates in the supplement include:
• Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd Implied terms
• Central Tenders Board v White (PC) - Public Authorities
• Patel v Mirza (SC) - Illegality
• Cavendish Square Holding BV v Makdessi and ParkingEye Ltd v Beavis (SC) Liquidated damages
• Bank of Cyprus UK Ltd v Menelaou (SC) Restitution, subrogation
• Bailey v Angove’s Pty Ltd (SC) Agency - irrevocable authority
• Consumer Rights Act 2015 and “consumer transport services”
• Versloot Dredging BV v HDI Gerling Industrie Versicherung AG (SC) - Insurance fraudulent claims
• PST Energy Shipping Ltd v OW Bunker Malta Ltd (SC) - Retention of title clause
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Orthopädie, Unfallchirurgie
Krämer, Jürgen, Grifka, Joachim
BASICS Orthopädie und Traumatologie
Ficklscherer, Andreas
Chitty on Contracts 32nd Ed.
Consolidated Mainwork Incorporating Second Supplement
Volume II - Specific Contracts
Chapter 31 - Agency
Section 1. - Agency in General 1
At common law the word “agency” can be said to represent a body of general rules under which one
person, the agent, has the power to change the legal relations of another, the principal. 2 It is
sometimes indeed said that prima facie what a person can do himself he can do by an agent; but this
is not always so. 3 The main areas in which this power is analysed are the law of contract, where an
agent may have power to bind and entitle his principal by contract and by acts connected with the
performance of a contract, and the law of property, where he may have power to receive property for
his principal or make a valid disposition of his principal’s property; and these are dealt with in this
chapter. Similar reasoning may appear in other areas (e.g. torts, evidence); but the doctrines of
agency are not always so well worked out beyond the main spheres of their operation, and the
context in which the reasoning is used and the extent of its use may therefore require careful
consideration in each case. The legal doctrines which have been developed stress the generality of
the agent’s power to bind and entitle his principal, while himself dropping out of the transaction and
incurring neither rights nor liabilities, though sometimes the agent may himself be liable and entitled in
addition. 4 These may be said to concern the external aspect of agency. But there are also certain
typical rules, less fully developed, concerning the rights and liabilities of principal and agent inter se.
In particular, these deal with the agent’s duties (normally of reasonable care), impose fiduciary duties
on the agent, and regulate his rights to remuneration(typically by commission) and to indemnity. 5
They may be said to concern the internal aspect of agency.
Incomplete agency: canvassing agents
There are other persons who, because they represent others in certain respects, may in common
speech be called agents, yet who cannot be said to come within the full scope of the law of agency as
defined above. These are agents whose function is to introduce business, such as (in England at
least) real estate agents, 6 and insurance agents 7: they are sometimes referred to as “canvassing
agents”. In the terminology of the previous paragraph, they have an internal relationship with their
principals, but their external power to change their principal’s legal relations may be very limited
indeed or even non-existent. It can indeed be said that persons acting in such a capacity are not
agents at all 8; yet, apart from the fact that the term agent is commonly used of them, most of the
typical rules regulating the internal relation between principal and agent, especially those relating to
fiduciary obligations, 9 may be applicable. Hence they are normally, and, it is submitted, correctly,
subsumed under the law of agency, though its full consequences do not apply: they may be called
examples of “incomplete agency”.
Distributors and franchisees
A third group to which the term “agent” may be applied in common speech is that of franchise holders
and distributors of particular products. Though it is possible that such a person is an agent in the
sense that his obligation to his principal is that of an agent even though he deals with the outside
world in his own name, 10 it is in fact more likely that the common law will classify such persons as
purchasers for resale 11; and as such no attempt has been made to extend any principles of agency
law to them—an extension which would necessarily be by analogy only. 12
Civil law systems may tend to stress the unity of the (internal) notion of representation described
above, sometimes deriving the agent’s external power from a separate source. 13 They may in
consequence classify, sometimes elaborately, different types of representative, developing special
rules for the powers, rights and duties of each; and the term “agent” or its translation may carry a
specific rather than a general meaning. Also, a distinction is often (but not universally) taken in civil
law between “direct representation” and “indirect representation”, the latter connoting a method of
dealing whereby the “agent” deals personally, but remains on an agency basis with his principal
internally. 14 While there can be no objection to a party acting in such a way, such a conceptual
A further feature of foreign agency law which
distinction is not recognised by the common law. 15
has surprised some English lawyers is that certain agents may be protected against what is thought
to be the unfair termination of authority by means of a statutory right to indemnity or compensation for
loss of goodwill built up. 16 Some of these typical rules may be extended to franchise holders and
distributors. Some intermediaries may also be entitled to the protections of employment law. Since
under English law agents are not necessarily independent and may be employees, this last
proposition may be true in England also, but would not normally be considered under the head of
Use of the terms “agent”, “agency”
It follows from the indications given earlier of the ways in which the notion of the agency can be
viewed, and the terms “agent” and “agency” used, that when it falls to be considered whether a
person is an agent, and if so of which party to a transaction, it is often true that no simple answer can
be given. 17 Some persons who describe themselves or are described by others as agents are not
really such in any legal sense of the word, but rather independent merchants, dealers, consultants or
intermediaries. Others may be agents in the sense that they owe the internal duties of the agent to his
principal (mainly the fiduciary duties) 18 and are paid by commission, but have no external powers (for
example, estate agents). Others may be agents in the full sense that they have power to bind and
entitle their principals contractually or by disposition of property: but it does not follow from this that
they may not be parties to any contract made also. 19 Some persons, again, may be parties to what is
in the previous paragraph referred to as an “indirect representation” situation. The substance of the
matter prevails over the form 20 and the use of the words “agent” or “agency”, or even a denial that
they are applicable, is not conclusive that any particular type of relationship exists. It has however
been said that where the term “agent” is used in a formal document (to which English principles of
interpretation are to be applied), it may be presumed that the word is used in its proper legal
connotation (viz of a person having power to bind his principal) unless there are strong indications to
the contrary 21; and though this was said in a dissenting judgment it may well be a reasonable guide.
On the orthodox and accepted analysis, the full paradigm relationship of principal and agent arises
where one party, the principal, consents that another party, the agent, shall act on his behalf, and the
agent consents so to act. This consent is said to confer “authority” on the agent; and from this
authority stems his power to affect the principal’s legal position. The relationship between principal
and agent need not be contractual: an agent can act gratuitously, 22 as many do under powers of
attorney. There will usually however be a contract accompanying the grant of authority, which is
conceptually separate. 23 An extension of this reasoning is that the consent may also be given
subsequently, by ratification. 24 Except perhaps in the case of agency of necessity, 25 such consent is
however essential for the full agency relationship. 26 But under the doctrine of apparent authority, a
further extension, a third party may be entitled to rely on the appearance of authority and hold the
principal liable as if there had been such consent. This, since it only benefits the third party, is
expounded under a different head. 27 The consent of the principal, which is regarded as the basic
justification for the agent’s power to affect his principal’s legal relations, may of course be implied
from his conduct or from his position with regard to the agent, and vice versa. 28 It has been
suggested that “some wider conception of vicarious responsibility other than that of agency, as
normally understood, may have to be recognised in order to accommodate some of the more
elaborate cases which arise where there are two persons who become mutually involved or
associated in one side of a transaction”. 29 At present, however, this remains no more than a
suggestion by a distinguished judge which has not been developed; and the trend of subsequent
cases remains inconsistent with it. 30
General and special agents
For the purpose of determining the authority of any particular one, agents were sometimes in the past
classified as general or special. A general agent has authority to act in all matters of a particular
nature or concerning a particular trade or business; or to act in the ordinary course of a business or
profession, e.g. as a solicitor, broker or factor. 31 A special agent has authority only to do some
particular act or act in some particular transaction which is not in the ordinary course of his business
or profession as an agent. But the matter is one of degree, and it is doubtful whether the distinction
(which was formerly significant in the emergence of the doctrine of apparent authority 32) is nowadays
of much utility. 33
Servant (employee) and independent contractor
The traditional formulation is that a servant (or employee) is under the control of his master (or
employer) not only as to what he does but also as to the manner in which he executes his work 34; the
independent contractor, on the other hand, undertakes to produce, or to endeavour to produce, a
given result and is not under the orders or control of the principal in his manner of execution. 35 This
distinction is principally used in the law of tort, where it retains some validity despite considerable
recent modifications of the test for vicarious liability in general 36 and extensions of the law relating to
breach of non-delegable duties. 37 Much energy has been devoted to attempts to systematise the
relations between these figures and the agent. Though there are interconnections between tort and
contract, the use of tort terminology is not usually appropriate in pure contract cases, and such
attempts are probably of little practical value for the law as it stands at present. Some employees
have agency powers, some not; the same is true of independent contractors. Some owe fiduciary
duties, some not. Some agents fall into neither group (e.g. gratuitous agents). 38
The writer of this chapter is much indebted for advice from Professor Peter Watts of the
Restatement, Third, Agency, paras 1.01, 2.01 (action that has “legal consequences for the
principal”).
The power to act by an agent is sometimes expressly recognised by statute: e.g. Bills of
Exchange Act 1882 ss.22–26, 91 (see below, paras 31-066, 31-089); Limitation Act 1939 s.24
(now s.30 of the Limitation Act 1980) (see Wright v Pepin [1954] 1 W.L.R. 635; Re
Transplanters (Holding Co) Ltd [1958] 1 W.L.R. 822). The power of trustees to delegate to
others is regulated by Trustee Delegation Act 1999; Trustee Act 2000 ss.11–23. As to rights to
conduct litigation for another see Gregory v Turner [2003] EWCA Civ 183, [2003] 1 W.L.R. 1149
; as to verification of documents for another by affidavit see Clauss v Pir [1988] Ch. 267. Where
a statute is silent, the normal implication is that, in the absence of other indications, the basic
rule permitting acts by an agent applies: see R. v Kent Justices (1873) L.R. 8 Q.B. 305; Re
Whitley Partners Ltd (1886) 32 Ch. D. 337; R. v Assessment Committee of St Mary Abbot’s,
Kensington [1891] 1 Q.B. 378; LCC v Agricultural Food Products Ltd [1955] 2 Q.B. 218; McRae
v Coulton (1986) 7 N.S.W.L.R. 644 (containing illuminating discussion as to forms of signature);
General Legal Council (on the application of Whitter) v Frankson [2006] UKPC 42, [2006] 1
W.L.R. 2803. The Statute of Frauds Amendment Act 1828 s.6 (as to which, see Vol.I,
para.7-042) has been held to require personal signature, which has caused difficulties as to
signature by agents of companies: see Hirst v West Riding Union Banking Co [1901] 2 K.B. 560
; UBAF Ltd v European American Banking Corp (The Pacific Colocotronis) [1984] Q.B. 713
(noted [1984] J.B.L. 248); and see McRae v Coulton, above. A signature may be in electronic
form: Lindsay v O’Loughnane [2010] EWHC 529 (QB) at [95]; in the context of the Statute of
Frauds and guarantees: Golden Ocean Group Ltd v Salgaocar Mining Industries Pvt Ltd [2011]
EWHC 56 (Comm), [2011] 1 W.L.R. 2575 at [95] (discussing different possible meanings of
“electronic signature”); on appeal [2012] EWCA Civ 265, [2012] 1 Lloyd’s Rep. 542 at [31] et
seq. See also Ramsay v Love [2015] EWHC 65 (Ch) (writing machine operated by person with
general authority).
See below, paras 31-083, 31-084.
See below, paras 31-112 et seq.
See below, para.31-012.
See below, para.31-015.
See Vogel v R & A Konstamm Ltd [1973] Q.B. 133, 136–137, 147. But cf. Freehold Land
Investments Ltd v Queensland Estates Pty Ltd (1970) 123 C.L.R. 418, and it seems likely that
some such persons involved in the sale of goods can be commercial agents: below,
para.31-017.
Below, paras 31-118 et seq.; Premium Real Estate Ltd v Stevens [2009] 2 N.Z.L.R. 384 (real
estate agent); McWilliam v Norton Finance (UK) Ltd [2015] EWCA Civ 186 (credit broker); Tigris
International BV v China Southern Airlines Co Ltd [2014] EWCA Civ 1649.
See, e.g. Bolus & Co Ltd v Inglis Bros Ltd [1924] N.Z.L.R. 164, 175; Fraser v Equitorial
Shipping Co Ltd (The Ijaola) [1979] 1 Lloyd’s Rep. 10. Such an arrangement may be called
“indirect agency” and would be similar to the contract of commission in civil law systems: see
below, n.15. There could also be true agency functions as regards guarantees, servicing,
repairs and the like.
See below, para.31-022.
But the use of “Romalpa” clauses in sale contracts raises problems which can be related to
agency, for it may appear that the buyer under reservation of title resells as agent for the seller:
see Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd [1976] 1 W.L.R. 676; below,
paras 44-170 et seq.; Michelin Tyre Co Ltd v Macfarlane (Glasgow) Ltd (1916) 55 Sc.L.Rep. 35
HL. And it may sometimes be arguable that distributors and franchisees are subject to fiduciary
duties: see Feuer Leather Corp v Frank Johnstone & Sons [1981] Com. L.R. 251; also Artifakts
Design Group Ltd v NP Rigg Ltd [1993] 1 N.Z.L.R. 196 (sale of competing goods); cf. Lothian v
Jenolite Ltd, 1969 S.C. 111; Hospital Products Ltd v US Surgical Corp (1985) 156 C.L.R. 41,
especially at 92; Jani- King (GB) Ltd v Pula Enterprises Ltd [2007] EWHC 2433 (QB), [2008] 1
All E.R. (Comm) 451. In Toycorp v Milton Bradley Australia Pty Ltd [1992] 2 V.R. 572 a
franchisor was held to have ordered goods as agent for its franchisee.
See Schmitthoff, Recueil des Cours 115.
This forms a basic category in the Principles of European Contract Law (2000).
In civil law countries such a party may sometimes be referred to as a commission agent or
commissionnaire, to whom it is said that the common law undisclosed principal (below,
para.31-063) offers a parallel. The similarity is limited: the doctrine of the undisclosed principal
requires that the principal authorise the agent to bind him by contract, which is not true of
commissionnaires. Such a figure occasionally appears in the English cases: e.g. Ireland v
Livingston (1872) L.R. 5 H.L. 395, 407–408; Armstrong v Stokes (1872) L.R. 7 Q.B. 598, 605;
Robinson v Mollett (1875) L.R. 7 H.L. 802, 809–810 (three expositions by Blackburn J.);
Maspons y Hermano v Mildred, Goyeneche & Co (1882) 9 Q.B.D. 530; affirmed (1883) 8 App.
Cas. 874; R & J Bow Ltd v Hill (1930) 37 Ll.L. Rep. 46, 47–48; Triffit Nurseries v Salads
Etcetera Ltd [1999] 1 Lloyd’s Rep. 697, 700; Brandeis Brokers Ltd v Black [2001] 2 Lloyd’s Rep.
359; Royal & Sun Alliance Insurance Plc v MK Digital FZE (Cyprus) Ltd [2006] EWCA 629,
[2006] 2 Lloyd’s Rep. 110; OMV Petrom SA v Glencore International AG [2015] EWHC 666
(Comm); cf. Anglo-African Shipping Co Ltd v J. Mortner Ltd [1962] 1 Lloyd’s Rep 610 CA. It
seems that such a mode of operation is sometimes artificially adopted for tax reasons. In that
respect it risks being caught by the undisclosed principal rules: see especially below, paras
31-063, 31-065. See Hill (1968) 31 M.L.R. 623; Bowstead and Reynolds on Agency, 20th edn
(2014), paras 1–020, 1–021, 12–029; Kortmann and Kortmann, Agency Law in Commercial
Practice (OUP, 2016).
This is now part of UK Law. See below, para.31-153.
See, e.g. Wong Mee Wan v Kwan Kin Travel Services Ltd [1996] 1 W.L.R. 38 (tour operator
held principal and so liable for negligence of sub-contractor); Titshall Ltd v Qwerty Travel Ltd
[2011] EWCA Civ 1569; cf. Shepperd v Crystal Holidays Ltd [1997] C.L. 500 (holiday company
agent to make contract with skiing instructor); IRC v SecretHotels2 Ltd [2014] UKSC 16, [2014]
2 All E.R. 685 (intermediary making hotel bookings: context, VAT). The Package Travel,
Package Holidays and Package Tours Regulations 1992 (SI 1992/3288, as amended) place
certain obligations on package tour organisers or retailers: see reg.115, discussed above, Vol.I,
para.14-044. See also below, para.31-022.
Below, paras 31-118 et seq.
Below, para.31-084.
Kennedy v De Trafford [1897] A.C. 180, 188; below, para.31-022. See an elaborate discussion
of agency in the context of commercial lenders, “originators” and “introducers” in Tonto Home
Loans Australia Pty Ltd v Tavares [2011] NSWCA 389.
Shell Co of Australia Ltd v Nat Shipping Bagging Services Ltd (The Kilmun) [1988] 2 Lloyd’s
Rep. 1, 16, per Sir Denys Buckley. This problem may occur, for example, in the case of
legislative or contractual provisions forbidding the use of “agents” and/or requiring disclosure of
“commission” paid to “agents”. If a tenderer for a contract uses the services of a local person or
company to assist in the preparation of the tender and promises a commission, is he using the
services of an “agent”? Not of an agent in the full legal sense.
See below, para.31-117.
See Bowstead and Reynolds on Agency, 20th edn (2014), para.1–006. A recent illustration is
Blankley v Central Manchester Children’s University Hospitals NHS Trust [2015] EWCA Civ 18,
[2015] 1 Costs L.R. 119, where the authority might have at some points not existed by reason
of mental incapacity, but the accompanying solicitor’s retainer remained valid and was not
See below, paras 31-027 et seq.
See below, para.31-035.
Pole v Leask (1863) 33 L.J.Ch. 155, 161–162; Garnac Grain Co Inc v HMF Faure & Fairclough
Ltd [1968] A.C. 1130n., 1137; Fridman (1968) 84 L.Q.R. 224.
Below, paras 31-056 et seq.
Branwhite v Worcester Works Finance Ltd [1969] 1 A.C. 552, 587; Hely-Hutchinson v Brayhead
Ltd [1968] 1 Q.B. 549, 583; and see below, paras 31-027 et seq. as to ratification.
Branwhite v Worcester Works Finance Ltd, above, at 587, per Lord Wilberforce. See also
Heaton’s Transport (St Helen’s) Ltd v TGWU [1973] A.C. 15; Ismail v Polish Ocean Lines [1976]
Q.B. 893; but cf. Rose v Plenty [1976] 1 W.L.R. 141.
The cases plainly assert orthodox principles: Sorrell v Finch [1977] A.C. 728; Moorgate
Mercantile Co v Twitchings [1977] A.C. 890; Kooragang Investments Pty Ltd v Richardson &
Wrench Ltd [1982] A.C. 462; British Bank of the Middle East v Sun Life Assurance Co of
Canada (UK) Ltd [1983] 2 Lloyd’s Rep. 9. But cf. First Energy (UK) Ltd v Hungarian
International Bank Ltd [1993] 2 Lloyd’s Rep. 194; below, para.31–056. In Plevin v Paragon
Personal Finance Ltd [2014] UKSC 61, [2014] 1 W.L.R. 4222, Lord Sumption said, in the
context of s.140A of the Consumer Credit Act 1974, that “In their ordinary and natural meaning
the words ‘on behalf of’ import agency”: at [30]. The effect was to narrow the broad protective
discretion in respect of liability of a lender for acts of others given by s.140A. See comment by
McMeel, Agency Law in Commercial Practice (2016) paras 10.25 et seq.
As to factors and brokers see below, para.31-009.
See Smith v M’Guire (1858) 3 H. & N. 554; Brady v Todd (1861) 9 C.B.(N.S.) 592; and Barrett v
Irvine [1907] 2 I.R. 462. See also Brown [2004] J.B.L. 391.
But the notion was invoked (unsuccessfully) in the context of a company said to be general
agent for its wholly owned subsidiary: Dun & Bradstreet Software Services (England) Ltd v
Provident Mutual Life Assn [1998] 2 E.G.L.R. 175 CA.
Mersey Docks & Harbour Board v Coggins & Griffiths (Liverpool) Ltd [1947] A.C. 1; Hewitt v
Bonvin [1940] 1 K.B. 188, 191.
For a standard formulation see Honeywill & Stein Ltd v Larkin [1934] 1 K.B. 191, 196.
See Lister v Hesley Hall Ltd [2001] UKHL 22, [2002] 1 A.C. 215; Various Claimants v Catholic
Child Welfare Society [2012] UKSC 56, [2013] 2 A.C. 1.
Woodland v Essex CC [2013] UKSC 66, [2014] A.C. 537.
Below, para.31-117.
© 2018 Sweet & Maxwell
Section 2. - Examples of Types of Agent
Factors and brokers 39
The distinction between these was important in nineteenth-century commerce and is still important for
the understanding of old cases. A factor was:
“a person to whom goods are consigned for sale by a merchant residing abroad or at a
distance from the place of sale; and he usually sells in his own name without disclosing
that of his principal.” 40
A factor was therefore entitled to contract in his own name 41 and to receive payment, 42 and his
possession of the goods and lien over them for his charges and expenses gave him the right to sue
the third party on the contract of sale of them which he had made. 43 He might instead sometimes sell
goods which he had bought from the person consigning the goods, and the third party might not
always know which the factor was doing. These propositions were not normally true of brokers, who
negotiated and often concluded contracts in respect of goods which they did not hold at all, and might
be assumed to be dealing for others. 44 The factor is central to the development of the doctrine of the
undisclosed principal, 45 under which the principal can sue or be sued directly on a contract with a
person authorised to make it, who does not indicate at the time of contracting that he is acting for
another—but subject to safeguards. This wider doctrine made it unnecessary to resolve all of the
puzzles about the factor’s position vis-à-vis the agent and third party, which was in effect superseded
by a theory based in general agency law. The term “factor” is however not used in this sense in
England nowadays, and the term “broker” has subsequently been applied to a much wider range of
occupations, starting with stockbrokers but extending much further.
An agent for the sale of goods sometimes acts under a del credere commission; that is, for a special
commission, 46 he becomes responsible to his principal for the solvency of a buyer; or, in other words,
he guarantees to his principal, in cases of sale, the payment of the price of the goods sold, when
ascertained and due. 47 His liability is however limited to ascertained sums which become due as
debts: the principal may not litigate with a del credere agent disputes arising out of contracts made by
the agent. 48 Such an agent does not become responsible to the buyer for due performance by his
principal, 49 nor can he sue the third party on the contract. 50 A del credere agency may be implied, or
inferred from a course of conduct, 51 and does not need to be evidenced in writing because, being
merely incidental to another transaction, it is not a promise to answer for the debt, default or
miscarriage of another within s.4 of the Statute of Frauds, i.e. not a guarantee. 52. In modern
commerce, such agency could involve enormous liabilities, and it has largely been superseded by
credit guarantees, confirmations 53 and the like.
The auctioneer has a lien over the goods which he sells and an interest in their proceeds which is
nowadays explained as a collateral contract, separate from that between vendor and purchaser,
entitling him not only to receive the price but also to sue for it. 54
“The auctioneer sues for the price by virtue of his special property and his lien, and also,
in most cases, by virtue of his contract with the buyer that the price shall be paid into his
hands.” 55
An auctioneer is agent to sell at an open sale, but it has been held that he has no authority to give
warranties as to the property auctioned unless he has been expressly authorised to do so 56; authority
to receive a contract deposit may be implied. 57 Although the auctioneer is primarily an agent for the
vendor, he was also the agent of a purchaser to sign a contemporary memorandum sufficient to
satisfy s.40 of the Law of Property Act 1925 58; and it may be that the same reasoning applies now
that the actual contract has to be in writing under the Law of Property (Miscellaneous Provisions) Act
1989 s.2. 59 The authority of the auctioneer to sign was held to arise directly the contract is concluded,
and, at any rate on the part of the vendor, was said to be irrevocable. 60 The authority did not extend
to the auctioneer’s clerk unless the purchaser assented to the clerk’s signing for him. 61
Real estate agents 62
In England and Wales, an agent employed by the vendor to find a purchaser is an agent in a limited
sense only. 63 He has authority to describe the property and make statements as to its value so as to
bind his principal, 64 but he has no implied authority to receive a pre-contract deposit on such terms as
to make the prospective vendor liable 65 and no power, without express authority, to conclude a
contract for a lease 66 or a sale. 67 He therefore provides an example of what has been called above
“incomplete” or “canvassing agency”. 68 It has been held that if he is instructed to sell, he is impliedly
authorised to sign on behalf of his principal an open contract of sale, but not a contract containing
special conditions. 69 It is his duty to communicate to his principal the best offer received by him at
any time before a binding contract for the sale of the property has been actually signed by the
principal, 70 unless, of course, he has been informed by his principal that such an offer is not
acceptable 71; and in general he owes fiduciary duties to his principal. 72
Solicitors 73
Solicitors provide professional services, but may also have agency functions. In litigation, there are
decisions that a solicitor, acting under a general retainer, has implied authority to accept service of
process and appear for the client, but has no authority to commence an action. 74 As between client
and opponent, the former is in general bound by the acts of his solicitor done in the ordinary course of
practice. Solicitors and counsel were said to have a general implied authority to effect a reasonable
compromise (unless forbidden) in all matters connected with the suit in question and not merely
collateral to it. They would therefore have apparent authority 75 to do so even if forbidden by the client,
against a third party without notice of the limitation 76; though if the consent was given under a
misapprehension it may be withdrawn before a consent order is drawn up. 77 But it is not clear that
such authority would be easily inferred today
. By s.69 of the Law of Property Act 1925, the
production of a deed containing a receipt for consideration money is authority for payment of that
money in cash to the solicitor.
The law of partnership raises many questions of agency law. The authority of partners is primarily
set out in s.5 of the Partnership Act 1890, which provides that:
“Every partner is an agent of the firm 80 and his other partners for the purpose of the
business of the partnership; and the acts of every partner who does any act for carrying
on in the usual way business of the kind carried on by the firm of which he is a member
bind the firm and his partners, unless the partner so acting has in fact no authority to act
for the firm in the particular matter, and the person with whom he is dealing either knows
that he has no authority, or does not know or believe him to be a partner.” 81
This section sets out the principles of actual and apparent authority as applicable to partners. As a
consequence of this general rule, the firm will prima facie be liable for any act done by a partner on
behalf of the firm 82 if it was done for the purpose of carrying on the partnership business in the usual
way, even though it was not in fact authorised by the other partners. The wording of the section,
which dates from a time when the distinction between actual and apparent authority, and between
them and vicarious liability in tort, was less well understood than it is now, has been held wide enough
to make a partner liable for the fraud of another partner outside the scope not only of actual or
apparent authority, but sufficiently connected with the acts he was asked to do to be regarded as
done in the course of the firm’s business. 83
Insurance agents and brokers 84
The agent of an insurance company, working on commission or as an employee, normally acts for the
company, though his authority may not extend far beyond the submission of proposals. 85 It has
however been held that he may become the agent of the proposer if he assists in the completion of
the proposal form. 86 An insurance broker, on the other hand, is prima facie an agent of the assured
and not of the underwriter 87: though he may also act as the underwriter’s agent in certain respects,
e.g. the handling of claims—a situation which has been construed as giving rise to a conflict of
interests. 88 He may also act on behalf of reinsurers required by the insuring underwriter. 89
Deemed agency: credit transactions
A dealer may be deemed to be the agent of the creditor if he negotiates a regulated consumer credit
agreement, e.g. a loan, hire-purchase, credit-sale or conditional sale agreement, as regards
representations made to the debtor, and for the purpose of receiving notice of cancellation, revocation
of offer and rescission. 90 He may also at common law be its agent in other respects 91; but there is no
general agency relationship, and he acts primarily on his own behalf. 92
See Munday (1977) 6 Anglo-Am.L.Rev. 221 (a valuable survey). As to the converse situation of
buying for another, see Feise v Wray (1802) 3 East 93; below, para.31-165.
Baring v Corrie (1818) 2 B. & Ald. 137, 143 per Abbott C.J.; see also Stevens v Biller (1883) 25
Ch. D. 31, 37. The definition of mercantile agent in the Factors Act 1889 has no relevance to
the definition of a factor at common law: Rolls Razor Ltd v Cox [1967] 1 Q.B. 552, 568. See
further below, paras 31-079 et seq.
Baring v Corrie, above.
Drinkwater v Goodwin (1775) 1 Cowp. 251.
Drinkwater v Goodwin, above; see Bowstead and Reynolds on Agency, 20th edn (2014),
para.9–009; Lomnicka and Morse, Contemporary Issues in Commercial Law (1997), p.161;
below, para.31–099.
Baring v Corrie (1818) 2 B. & Ald. 137; Linck, Moeller & Co v Jameson & Co (1885) 2 T.L.R.
See Goodhart and Hamson (1932) 4 C.L.J. 320; below, paras 31–063 et seq.
See JM Weatherspoon & Co Ltd v Henry Agency House (1961) 28 Malaya L.J. 86.
Morris v Cleasby (1816) 4 M. & S. 566, 574; Hornby v Lacy (1817) 6 M. & S. 166. See Chorley
(1929) 45 L.Q.R. 221; (1930) 46 L.Q.R. 11.
Thomas Gabriel & Sons v Churchill & Sim [1914] 2 K.B. 1272; cf. Rusholme & Bolton & Roberts
Hadfield v SG Read & Co [1955] 1 W.L.R. 146 (confirming house).
Churchill & Sim v Goddard [1937] 1 K.B. 92.
Bramwell v Spiller (1871) 21 L.T. 672.
Shaw v Woodcock (1827) 7 B. & C. 73. But this would be rare nowadays: cf. Nouvelles
Huileries Anversoises SA v HC Mann & Co (1924) 40 T.L.R. 804.
Couturier v Hastie (1852) 8 Exch. 40; reversed on another point (1856) 5 H.L. Cas. 673. See
below, para.45-050
As to confirming houses, see Bowstead and Reynolds on Agency, 20th edn (2014),
para.9–021.
Chelmsford Auctions Ltd v Poole [1973] Q.B. 542. See below, para.31-099; Reynolds, n.43
above, pp.265–266. In general the third party cannot avoid his liability by paying the vendor
directly: Robinson v Rutter (1855) 4 E.& B. 954, as explained in the Chelmsford Auctions case.
The implication is more restricted in the case of land. The existence of the right does not mean
that the auctioneer is liable to the vendor for not exercising it: Fordham v Christie, Manson &
Woods Ltd [1977] E.G.D. 94.
Benton v Campbell, Parker & Co Ltd [1925] 2 K.B. 410, 416.
Payne v Lord Leconfield (1882) 51 L.J.Q.B. 642. See also Overbrooke Estates Ltd v
Glencombe Properties Ltd [1974] 1 W.L.R. 1335; Collins v Howell-Jones [1981] E.G.D. 207.
See Mynn v Joliffe (1834) 1 Moo. & Rob. 326.
Chaney v Maclow [1929] 1 Ch. 461. But not where he was himself plaintiff: see Farebrother v
Simmons (1822) 5 B. & Ald. 333; cf. Wilson & Sons v Pike [1949] 1 K.B. 176; below,
para.31-055; Vol.I, paras 5-036 et seq.
But the section does not apply to sales by “public auction”: so that in such cases a written
contract is not normally required.
Phillips v Butler [1945] Ch. 358 (highest bidder allowed to send deposit next day and in the
meantime vendor withdraws auctioneer’s authority—withdrawal ineffective). In principle
authority is revocable: below, para.31-166. The reason given here is that a different rule “would
be opening a wide door to fraud”: Van Praagh v Everidge [1902] 2 Ch. 266, 270; but it is difficult
to square with theory. See Reynolds in Cranston, Making Commercial Law (1997), pp.265–266.
Bell v Balls [1897] 1 Ch. 663. See in general Murdoch, Law of Estate Agency, 5th edn (2009).
See above, para.31-002; below, paras 31-115, 31-140 et seq. The qualifications and activities
of estate agents are affected by the Estate Agents Act 1979: see Murdoch, Law of Estate
Agency, 5th edn (2009), Ch.7. See also Consumers, Estate Agents and Redress Act 2007 Pt 3,
It should be noted that practice may differ in other jurisdictions.
Mullens v Miller (1882) 22 Ch. D. 194; Sorrell v Finch [1977] A.C. 728, 753. But he has no
authority to warrant that it may lawfully be used for a particular purpose: Hill v Harris [1965] 2
Q.B. 601; and the possibility of warranty may be expressly excluded: Overbrooke Estates v
Sorrell v Finch, above, explaining Ryan v Pilkington [1959] 1 W.L.R. 403 and overruling Goding
v Frazer [1967] 1 W.L.R. 286; Burt v Claude Cousins & Co Ltd [1971] 2 Q.B. 426 and (in part)
Barrington v Lee [1972] 1 Q.B. 326. But not payment: Petersen v Moloney (1951) 84 C.L.R. 91.
As to deposits, see further below, para.31-109.
Thuman v Best (1907) L.T. 239; cf. Walsh v Griffiths-Jones (1980) 259 E.G. 331.
Hamer v Sharp (1874) L.R. 19 Eq. 108; Chadburn v Moore (1892) 61 L.J.Ch. 674; cf. Keen v
Mear [1920] 2 Ch. 574; Rosenbaum v Belson [1900] 2 Ch. 267; Wragg v Lovett [1948] 2 All
E.R. 968; Law v Robert Roberts & Co [1964] I.R. 292 (authorities reviewed). cf. Spiro v Lintern
[1973] 1 W.L.R. 1002; and Jawara v Gambian Airways [1992] C.L.Y. 95, where there was
authority on the facts.
Above, para.31-002.
Keen v Mear, above.
Keppel v Wheeler [1927] 1 K.B. 577.
See Burchell v Gowrie & Blockhouse Collieries [1910] A.C. 614, 625.
e.g. Regier v Campbell-Stuart [1939] Ch. 766; see below, paras 31-118 et seq.
See Cordery on Legal Services, 9th edn (looseleaf). But note United Bank of Kuwait Ltd v
Hammoud [1988] 1 W.L.R. 1051, 1063, per Staughton L.J.: “I prefer to have regard to the
expert evidence of today in deciding what is the ordinary authority of a solicitor”. See further
below, para.31-131.
Wright v Castle (1817) 3 Mer. 12.
See below, paras 31-056 et seq.
Strauss v Francis (1866) L.R. 1 Q.B. 379; Re Newen [1903] 1 Ch. 812; Little v Spreadbury
[1910] 2 K.B. 658; Welsh v Roe (1918) 87 L.J.K.B. 520; Thompson v Howley [1977] 1 N.Z.L.R.
16; Waugh v HB Clifford & Sons Ltd [1982] Ch. 374 (authorities reviewed); Penman v Parker
[1986] 1 W.L.R. 882 (notice under Road Traffic Act); Marsden v Marsden [1972] Fam. 280
(barrister). As to the authority of a representative from a Citizens’ Advice Bureau see Freeman
v Sovereign Chicken Ltd [1991] I.R.L.R. 408. See below, para.31-056 (apparent authority).
Shepherd v Robinson [1919] 1 K.B. 474. See Foskett, Law and Practice of Compromise, 7th
edn (2010), Ch.21.
The modern position regarding solicitor’s authority to bind his or her client, at any rate in
Australia, is discussed at length in Pavlovic v Universal Music Australia Pty Ltd [2015] NSWCA
See also ss.6, 7, 8, 9, 14, 17, 36, 38; and in general Lindley and Banks on Partnership, 19th
edn (2010).
As to the meaning of “firm”, see s.4.
But a “limited partner” has no power to bind his firm: Limited Partnerships Act 1907 s.6 (though
a member of a limited liability partnership has: Limited Liability Partnerships Act 2000 s.6); and
joint adventurers are not necessarily partners with power to bind each other: Heaps v Dobson
(1863) 15 C.B.(N.S.) 460; cf. United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 C.L.R. 1.
The last 11 words of s.5 are notoriously ambiguous: see Montrose (1939) 17 Can. Bar Rev.
700-701; Thomas (1971) 6 Victoria U. of Wellington L.R. 1.
But not if done on his own account, or as trustee for the firm: Construction Engineering (Aust)
Pty Ltd v Hexyl Pty Ltd (1985) 155 C.L.R. 541.
Dubai Aluminium Co Ltd v Salaam [2002] UKHL 48, [2003] 2 A.C. 366 (dishonest assistance in
fraudulent scheme); Bank of Scotland v Henry Butcher & Co [2003] EWCA 67, [2003] 2 All E.R.
(Comm) 557; JJ Coughlan Ltd v Ruparella [2003] EWCA Civ 1057; Northampton Regional
Livestock Centre Co Ltd v Cowling [2015] EWCA Civ 651. See also the cases on solicitors,
above, para.31-013.
See Hodgin, Insurance Intermediaries: Law and Regulation (1992) (looseleaf).
See above, para.31-002. See Bawden v London, Edinburgh and Glasgow Assurance Co [1892]
2 Q.B. 534; Stone v Reliance Mutual Insurance Society Ltd [1972] 1 Lloyd’s Rep. 469 (noted
(1972) 88 L.Q.R. 462); Blackley v National Mutual Life Assn of Australasia Ltd [1972] N.Z.L.R.
1038; British Bank of the Middle East v Sun Life Assurance Co of Canada Ltd [1983] 2 Lloyd’s
Rep. 9.
Biggar v Rock Life Assurance Co [1902] 1 K.B. 516; Newsholme Bros v Road Transport and
General Insurance Co Ltd [1929] 2 K.B. 356; contrast the cases cited above, n.84.
Rozanes v Bowen (1929) 32 Ll.L. Rep. 98, 101; Con-Stan Industries of Australia Pty Ltd v
Norwich Winterthur (Australia) Ltd (1986) 160 C.L.R. 226; Callaghan and Hedges v Thompson
[2000] Lloyd’s Rep. I.R. 125. But cf. Stockton v Mason [1978] 2 Lloyd’s Rep. 430, a puzzling
Anglo-African Merchants Ltd v Bayley [1970] 1 Q.B. 311; North and South Trust Co v Berkeley
[1971] 1 W.L.R. 470. But see Goshawk Dedicated Ltd v Tyser & Co Ltd [2006] EWCA Civ 54,
[2006] 1 Lloyd’s Rep. 566 (brokers must produce documents to underwriters).
See General Accident Fire and Life Assurance Corp Ltd v Tanter (The Zephyr) [1984] 1 W.L.R.
100; [1985] 2 Lloyd’s Rep. 529.
Consumer Credit Act 1974 ss.56(2), 57(3), 69(6), 102(1). See Powell v Lloyd’s Bowmaker Ltd,
1996 S.L.T. 117 Sh Ct (agency as regards property sold or to be sold by dealer only; not as
regards car traded in); CF Asset Finance Ltd v Okonji [2014] EWCA Civ 870, [2014] E.C.C. 23
(agency to receive notice of revocation of offer). See below, para.39-075.
See Financings Ltd v Stimson [1962] 1 W.L.R. 1184; cf. Campbell Discount v Gall [1961] 1 Q.B.
431; Northgran Finance v Ashley [1963] 1 Q.B. 476; Car & Universal Finance Co Ltd v Caldwell
[1965] 1 Q.B. 525; Mercantile Credit Co Ltd v Hamblin [1965] 2 Q.B. 242.
Branwhite v Worcester Works Finance Ltd [1969] 1 A.C. 552 (but Lord Reid and Lord
Wilberforce took a different view); Shogun Finance Ltd v Hudson [2003] UKHL 62, [2004] 1 A.C.
919 at [51], [52].
Section 3. - Commercial Agents
An EC Directive, the most conspicuous effect of which is to confer special rights for certain agents,
designated “commercial agents”, in the event of termination of authority 93 has fairly recently been
and although the notion is unfamiliar in Great
brought into effect in Great Britain by regulation, 94
Britain, 95 cases in which agents have argued that they are entitled to the benefit of the Regulations
are now appearing. They “govern the relations between commercial agents and their principals”. 96
“Commercial agent” is defined as “a self-employed intermediary 97 who has continuing authority 98 to
negotiate 99 the sale or purchase of goods 100
on behalf of another person (the ‘principal’), or to
negotiate and conclude the sale or purchase of goods on behalf of and in the name of 101 that
principal”. 102 There are specific exceptions for officers of companies or associations, partners,
insolvency practitioners, 103 gratuitous agents, agents operating on commodity exchanges or in
commodity markets, the Crown Agents, 104 and persons whose activities as commercial agents are to
be considered secondary. 105
This latter must be assessed by reference to the particular
arrangement rather than the general balance of the agent’s activities. 106
The main effects of the regulations are referred to at appropriate points in this chapter. They cover the
duties of agent to principal and principal to agent, 107 remuneration and commission, 108 termination of
the contract, 109 (most conspicuously) rights to indemnity and compensation on such termination, 110
and restraint of trade clauses. 111 Except in the case of sums payable on termination of agency, the
rules do not differ much from the common law, though it is necessary to watch for differences of detail
that may arise because of the specific wording of the regulations (e.g. in the case of entitlement to
commission) when they apply. It should be noted also that under the regulations each party is entitled
to a signed written document setting out the terms of the agency contract, including any terms
subsequently agreed. 112
The notion of a “commercial agent” is not known to the common law. It has fairly narrow limits. Apart
from the specific exceptions, in the United Kingdom it only applies to agents acting in respect of sales
of goods and does not cover agents acting in regard to land, nor to those arranging services; it does
not cover distributors who purchase for resale 113; it only applies to self-employed agents, and only to
those with continuing authority. It is uncertain to what extent markets in the United Kingdom are
penetrated by agents of the sort referred to. It seems likely that when the Regulations do apply, it is
sometimes by accident.
The Commercial Agents Regulations: conflict of laws 114
By virtue of reg.1(2) the regulations apply “in relation to the activities of commercial agents in Great
Britain”. It is not clear how this is to be interpreted where the agent also conducts activities elsewhere,
nor to what extent the word “conduct” requires the agent’s presence. 116 But a further provision,
reg.1(3)(a), a modification introduced in 1998, 117 provides that where the parties have agreed 118 that
the agency contract is to be governed by the law of another Member State, 119 the law of that State
(which is of course likely to be to similar effect) is to be applied. Assuming that the limitation in
reg.1(2) continues to be valid in the absence of other indications, this rule is presumably still confined
to activities in Great Britain. However, a second provision, reg.1(3)(b), introduced at the same time
and in response to representations from the EC Commission, then provides that the regulations are to
be applied where the law of another Member State corresponding to the regulations enables the
parties to agree that the agency contract is to be governed by the law of a different Member State and
the parties have agreed that it is to be governed by the law of England and Wales or Scotland. It
would appear that this is directed at activities outside Great Britain, but in another Member State,
where the law referred to has been chosen. The meaning and purport of these changes is extremely
obscure. In particular, there is no indication of which Member State would be relevant to its
application, nor of where the activities are envisaged as being conducted. 120 It has been held that the
Regulations apply where an agent acts in Great Britain but under a contract governed by the law of a
non-Member State, e.g. California. 121
Commercial Agents Regulations [1986] O.J. L382/17.
By the Commercial Agents (Council Directive) Regulations 1993 (SI 1993/3053) as amended
by SI 1993/3173 and SI 1998/2868; Northern Ireland is covered by the Commercial Agents
(Council Directive) Regulations (Northern Ireland) 1993 (SI 1993/483), effective from January
14, 1994. There is a full discussion in Bowstead and Reynolds on Agency, 20th edn (2014),
Ch.11. For specialised works see Saintier and Scholes, Commercial Agents and the Law
(2005); Randolph and Davey, The European Law of Commercial Agency, 3rd edn (2010);
Singleton, Commercial Agency Agreements: Law and Practice, 4th edn (2015).
A useful analysis of the functions of a commercial agent is given by A.G. Trstenjak in Wood
Floor Solutions Andreas Domberger GmbH v Silva Trade SA (C-19/09) [2010] I.L.Pr. 21 at
AG53 et seq.
Commercial Agents Regulations reg.1(2). In Wood Floor Solutions Andreas Domberger GmbH
v Silva Trade SA (C-19/09) [2010] 1 W.L.R. 900 the CJEU treated such a contract as one for
the provisions of services for the purposes of Council Regulation 44/2001 on jurisdiction and
the enforcement of judgments. (This report does not include the opinion of A.G. Trstenjak,
Such agency is not confined to natural persons: Bell Electric Ltd v Aweco Appliance Systems
GmbH & Co [2002] EWHC 872, [2002] Eu. L.R. 443. The intermediary may have several
principals: Rossetti Marketing Ltd v Diamond Sofa Co Ltd [2011] EWHC 2482 (QB), [2011]
E.C.C. 28; point not referred to on appeal [2012] EWCA Civ 1021, [2013] 1 All E.R. (Comm)
This might exclude some agents whose functions were purely canvassing (above,
para.31-002), i.e. introducing business in some limited way. But in many cases there is an
appointment of an agent whose main or even sole function is to introduce business over a
period, and several cases accept such persons as coming within the definition: e.g. the cases
cited below, n.98 and Fern Computer Consultancy Ltd v Intergraph Cadworx & Analysis
Solutions Inc [2014] EWHC 2908 (Ch), [2014] Bus. L.R. 1397. Authority may be “continuing” if
there is authority to conclude a single contract plus authority to negotiate extensions: Poseidon
Chartering BV v Marianne Zeeschip VO (C-3/04) [2006] 2 Lloyd’s Rep. 105.
“Negotiate” does not require that the agent have authority to agree terms: PJ Pipe & Valve Co
Ltd v Audco India Ltd [2005] EWHC 1904 (QB), [2006] Eu. L.R. 368; Nigel Fryer Joinery
Services Ltd v Ian Firth Hardware Ltd [2008] 2 Lloyd’s Rep. 1080; Invicta UK v International
Brands Ltd [2013] EWHC 1564 (QB), [2013] E.C.C. 30.
As to which see Tamarind International Ltd v Eastern Natural Gas (Retail) Ltd [2000] Eu. L.R.
708 (gas). This would include computer software supplied together with some hardware:
whether software would rank as “goods”, or a “perpetual” licence with end users would rank as
“sale” for the purpose of these European regulations (as opposed to under the Sale of Goods
Act 1979: see below, para.44-015), is considered in Fern Computer Consultancy Ltd v
Intergraph Cadworx & Analysis Solutions Inc [2014] EWHC 2908 (Ch), [2014] Bus. L.R. 1397 at
[61] et seq. See also Software Incubator Ltd v Computer Associates Ltd [2016] EWHC 1587
This would appear to include situations where the principal is unidentified: see below, para.
31-089. But it does not include indirect agents (commissionnaires, above, para.31-004, n.15):
Mavrona & Sia OE v Delta Etaireia Symettochon AE (C-85/03) [2004] O.J. C94/17; or in general
agents who contract in their own name, which would cover agents for undisclosed principals:
Sagal v Atelier Bunz GmbH [2009] EWCA Civ 700, [2009] 2 Lloyd’s Rep. 303.
Commercial Agents Regulations reg.2(1). A national law requiring such agents to register
cannot prevent the application of the Directive: Bellone v Yokohama SpA (C-215/97) [1998]
E.C.R. I-2191.
As defined in s.388 of the Insolvency Act 1986 (as amended).
Commercial Agents Regulations reg.2(1), (2).
Commercial Agents Regulations reg.1(3). This provision is defined specifically for the UK by a
Schedule. The vires of this part of the regulations was unsuccessfully challenged in Crane v
Sky In-Home Services Ltd [2007] EWHC 66 (Ch), [2007] 2 All E.R. (Comm) 599. The
commodity exception is considered in W Nagel v Pluczenik Diamond Co NV [2017] EWHC
1750 (Comm), when it was held that the activities of a diamond broker were in the commodity
market, some particular operations outside the exception ranking as secondary.
See AMB Imballaggi Plastics SRL v Pacflex Ltd [1999] 2 All E.R. (Comm) 249, 254; Tamarind
International Ltd v Eastern Natural Gas (Retail) Ltd [2000] Eu. L.R. 708; Edwards v International
Connection (UK) Ltd [2006] EWCA Civ 662; Crane v Sky In-Home Services Ltd [2007] EWHC
66 (Ch), [2007] 2 All E.R. (Comm) 599 (extended discussion). UK courts, interpreting an
extremely obscure definition contained in the Schedule to the regulations (described as “an
almost impenetrable piece of drafting” in AMB Imballaggi v Pacflex Ltd [1999] 2 All E.R.
(Comm) 249, 254), have used the restriction to impose quite strict limits on when the
regulations apply, seeking to confine them to what may be called “goodwill-generating”
functions even when some other agency function is more prominent. See Gailey v
Environmental Waste Controls 2004 Scot SC 300 (OH), [2004] Eu.L.R.423; McAdam v Boxpak
Ltd [2006] CSIH 9, 2006 S.L.T. 217. See a careful discussion of the genesis of the provision by
Saintier [2012] J.B.L. 128; Bowstead and Reynolds on Agency, 20th edn (2014), paras 11-020
et seq. On a smaller scale, an argument, based on Crane v Sky In-Home, above, that where
software is sold linked to hardware the hardware is the goods and the software only secondary
was rejected in Fern Computer Consultancy Ltd v Intergraph Cadworx & Analysis Solutions Inc
[2014] EWHC 2908 (Ch), [2014] Bus. L.R. 1397.
Below, paras 31-112—31-115, 31-136.
Below, para.31-149.
Below, para.31-152.
Below, paras 31-153 et seq.
Below, para.31-159.
Commercial Agents Regulations reg.13(1); a purported waiver is void: reg.13(2). The
consequences of non-compliance are not stated.
AMB Imballaggi Plastics SRL v Pacflex Ltd [1999] 2 All E.R. (Comm) 249; Crane v Sky
In-Home Service Ltd [2007] EWHC 66 (Ch), [2007] Eu. L.R. 549; Sagal v Atelier Bunz GmbH
[2009] EWCA 700, [2009] 2 Lloyd’s Rep. 303. But a commercial agent may be remunerated by
markup: Mercantile International Group Plc v Chuan Soon Huat Industrial Group Plc [2002]
EWCA Civ 288, [2002] 1 All E.R. (Comm) 788.
See Dicey, Morris and Collins on the Conflict of Laws, 15th edn (2012), paras 33-420 et seq.
See discussion in Fern Computer Consultancy Ltd v Intergraph Cadworx & Analysis Solutions
Inc [2014] EWHC 2908 (Ch), [2014] Bus. L.R. 1397 at [108] et seq.
See Dicey, Morris and Collins on the Conflict of Laws, 15th edn (2012), para.33-422.
By the Commercial Agents (Council Directive) (Amendment) Regulations 1998 (SI 1998/2868).
A commercial agency contract was held subject to Spanish law in Lawlor v Sandrik Mining &
Construction, etc., Co [2012] EWHC 1188 (QB), [2012] 2 Lloyd’s Rep 25, apparently on the
basis of art.4(2) of the Rome Convention (operative at the relevant time). A point is that some of
the activities appear to have taken place outside Great Britain.
This includes a state which is a party to the Oporto EEA agreement of 1992 as adjusted by the
Brussels Protocol of 1993: reg.2 of SI 1993/3173 as amended by reg.2 of SI 1998/2868, above.
The meaning of this amendment is considered in Fern Computer Consultancy Ltd v Intergraph
Cadworx & Analysis Solutions Inc [2014] EWHC 2908 (Ch), [2014] Bus. L.R. 1397 at
[114]-[115]. See also Dicey, Morris and Collins on the Conflict of Laws, 15th edn (2012),
para.33-423.
Ingmar GB Ltd v Leonard Technologies Inc [2001] 1 All E.R. (Comm) 329 ECJ. See this case
criticised by Verhagen (2002) 51 I.C.L.Q. 135; Roth (2002) 3 C.M.L.Rev. 369. See further
Accentuate Ltd v Asigra Inc [2009] EWHC 2655 (QB), [2009] 2 Lloyd’s Rep. 599, where an
arbitration clause in a contract governed by the law of Ontario was held void even though the
arbitration had already taken place. In that case service out of the jurisdiction was permitted,
though the (contractual) justification for this was later rejected in Fern Computer Consultancy
Ltd v Intergraph Cadworx & Analysis Solutions Inc [2014] EWHC 2908 (Ch), [2014] Bus.
L.R.1397 at [114]-[115], on the basis that the claim for compensation under the regulations, was
statutory, or at best tortious. Where no ground for service out can be found, it seems that the
regulations can thus be evaded by choice of a foreign law and (preferably) jurisdiction: see the
Fern case, above, at [54]. See discussion in Bowstead and Reynolds on Agency, 20th edn
(2014), pp.724-725; Carruthers, Agency Law in Commercial Practice (2016).
Section 4. - Creation of Agency
The relationship of principal and agent is created by an express or implied agreement conferring
authority on the agent, which usually is but need not be accompanied by a contract. Authority can
also be conferred retrospectively by ratification, and may perhaps arise by operation of law where the
old doctrine of agency of necessity applies. Furthermore, the principal may be bound to the third party
under the doctrine of apparent authority or in some cases under the general doctrine of estoppel: this
is dealt with in the section on the principal’s relations with third parties. 122
Below, para.31-056.
(a) - Express Agreement
How agency constituted
The appointment must be by the principal or by someone else with authority (actual or apparent) to
act for him. An agent may of course be appointed in formal words, as by a power of attorney or a
specific letter of appointment. But a grant of authority may be informal. In all situations, the substance
of the matter is more important than the form. A retailer who describes himself as agent for a
manufacturer is in fact more likely to buy from the manufacturer and sell to the customer, 123 and a
person who agrees to procure goods may do so as agent, but may equally purport to do no more than
buy them and offer or resell them to his principal. 124 A contract describing the parties respectively as
principal and agent may in law have the effect, not of constituting agency, but of establishing a
relationship between the parties as principals. 125 On the other hand, the relationship of agency may
be created by an express agreement although the contract nowhere actually describes the parties as
principal and agent. For example, where a director was authorised by a general meeting of
shareholders to carry out negotiations for the sale of the shares of the company, the shareholders
were held to have appointed him as their agent. 126 So also, where a letter of credit is opened, the
relationship between the issuing and confirming bank is in certain respects that of principal and agent.
There may be agency even where the parties by their agreement purport to exclude such a
possibility, if this is the true interpretation of their relationship. 128
An agent, for whatever purpose he is appointed, may, in general, be appointed orally. There are some
statutory exceptions. Thus ss.53 and 54 of the Law of Property Act 1925 which require certain
instruments to be in writing, require written authorisation for signature by an agent. By s.53(1)(b) of
that Act it is provided that a declaration of trust respecting any land or any interest therein must be
manifested and proved by some writing signed by some person who is able to declare such trust or
by will. But where land is bought by an agent, the principal may prove a trust in his favour by parol
evidence even where the land has been conveyed to the agent, for otherwise the statute would serve
as a cloak for fraud. 129 Writing was not necessary to empower an agent to act in cases within s.40 of
the Law of Property Act 1925, requiring a “note or memorandum” in certain land transactions 130; and
the position remains the same under s.2 of the Law of Property (Miscellaneous Provisions) Act 1989,
which requires that the actual contract be in writing. 131 Nor is it necessary to authorise an agent in
writing to sign an acknowledgement for the purposes of the Limitation Acts. 132 Nor need a del credere
agent be appointed in writing. 133
But sometimes statutes require the appointment of an agent to be by deed. 134 And a deed can only
be executed by an agent, so as to bind his principal, if the authority to execute it is conferred by deed,
unless the deed is executed in the actual presence of the principal, 136 or its execution is not
required by law in the particular case. 137 But by virtue of the Law of Property (Miscellaneous
Provisions) Act 1989 s.1, a deed is no longer required to authorise delivery of a deed (e.g. by a
solicitor). 138
A power of attorney is a formal granting of authority by one person to another to act on the first
person’s behalf, usually in situations of illness or absence, though sometimes for commercial
purposes. 139 By virtue of the Powers of Attorney Act 1971 s.1, 140 an instrument creating a power of
The use of a prescribed
attorney must be executed as a deed 141 by the donor of the power. 142
form is also required for a Lasting Power of Attorney under the Mental Capacity Act 2005. 143
See, e.g. WT Lamb & Sons v Goring Brick Co Ltd [1932] 1 K.B. 710; Michelin Tyre Co Ltd v
MacFarlane (Glasgow) Ltd (1917) 55 Sc.L.Rep. 35 HL; Sproule v Triumph Motor Cycle Co
[1927] N.I. 83; International Harvester Co of Australia Pty Ltd v Carrigan’s Hazeldene Pastoral
Co (1958) 100 C.L.R. 644. See also above, para.31-003 n.12. The distinction turns largely but
not entirely on whether he takes the profit on resale or is remunerated by commission: see
Benjamin’s Sale of Goods, 9th edn (2014), paras 1-048, 1-049. The question has arisen in the
context of the Commercial Agents Regulations, above, para.31-019; also in the specialised
context of Value Added Tax. See Commissioners of Customs and Excise v Johnson [1980]
S.T.C. 624 (provision of educational courses); Potter v Commissioners of Customs and Excise
[1985] S.T.C. 45 (“Tupperware” sold at specially convened functions); Hill v Commissioners of
Customs and Excise [1988] S.T.C. 424 (craft pottery); Commissioners of Customs and Excise v
Paget [1989] S.T.C. 773 (school photographs sold to parents); Cornhill Management Ltd v
Commissioners of Customs and Excise [1991] 1 V.A.T.T.R. 1 (fund managers); Commissioners
of Customs and Excise v Music and Video Exchange Ltd [1992] S.T.C. 220 (profit on resale as
commission). See also Welsh Development Agency v Export Finance Co Ltd [1992] B.C.L.C.
148. As to the distinction between agent and borrower in the context of subsidiary companies,
see Atlas Maritime Co SA v Avalon Maritime Co Ltd (The Coral Rose) (No.1) [1994] 4 All E.R.
See, e.g. Ireland v Livingston (1871) L.R. 5 H.L. 395; Brown & Gracie Ltd v FW Green & Co Pty
Ltd [1960] 1 Lloyd’s Rep. 289; Anglo-African Shipping Co of New York Inc v J Mortner Ltd
[1962] 1 Lloyd’s Rep. 610.
Motor Union Insurance Co Ltd v Mannheimer Versicherungs Gesellschaft [1933] 1 K.B. 812
(reinsurance).
Briess v Woolley [1954] A.C. 333.
Bank Melli Iran v Barclays Bank (DCO) [1951] 2 T.L.R. 1057. See below, paras 34-524, 34-525.
Ex p. Delhasse (1878) 7 Ch. D. 511. But see below, para.31-063, as to undisclosed principals.
Rochefoucauld v Boustead [1897] 1 Ch. 196; Heard v Pilley (1869) L.R. 4 Ch. App. 548; Cave v
Mackenzie (1877) 46 L.J.Ch. 564; Du Boulay v Raggett (1988) 58 P. & C.R. 138. See also
Hodgson v Marks [1971] Ch. 892, 933.
Grindell v Bass [1920] 2 Ch. 487. See the 30th edition of the present work, Vol.I, paras 4-031,
4-036, 4-072 et seq.
See McLaughlin v Duffill [2008] EWCA Civ 1627, [2010] Ch. 1, distinguishing the position under
s.53(1) of the Law of Property Act 1925. For further discussion see Bowstead and Reynolds on
Agency, 20th edn (2014), para.8-004.
Limitation Act 1980 s.30(2); see Wright v Pepin [1954] 1 W.L.R. 635. See Vol.I, para.28-101.
Couturier v Hastie (1852) 8 Exch. 400; 5 H.L. Cas. 673; Sutton & Co v Grey [1894] 1 Q.B. 285.
See above, para.31-010; below, para.45-049.
e.g. Trustee Act 1925 s.25 as substituted by Trustee Delegation Act 1999 s.5.
Berkeley v Hardy (1826) 5 B. & C. 355; Powell v London & Provincial Bank [1893] 2 Ch. 555,
563; Windsor Refrigerator Co v Branch Nominees [1961] Ch. 88; Phoenix Properties Ltd v
Wimpole Street Nominees Ltd [1992] B.C.L.C. 737.
R. v Longnor (Inhabitants) (1833) 4 B. & Ad. 647.
Hunter v Parker (1840) 7 M. & W. 322, 344; Marchant v Morton, Down & Co [1901] 2 K.B. 829;
Windsor Refrigerator Co v Branch Nominees [1961] Ch. 88, on appeal [1961] Ch. 375.
There is a conclusive presumption of authority in the case of delivery by a solicitor or licensed
conveyancer in certain circumstances: see s.1(5). See in general Virgo and Harpum [1991]
L.M.C.L.Q. 209.
See Aldridge, Powers of Attorney, 10th edn (2007).
As amended by the Law of Property (Miscellaneous Provisions) Act 1989 s.4 and Sch.1.
As to the requisites of a deed (e.g. as to witnesses) see Law of Property (Miscellaneous
Provisions) Act 1989 s.1. An imperfect power of attorney may rank as an informal authorisation
in writing: Rose v Rose (1986) 7 N.S.W.L.R. 679.
The Act also makes provision for proof of powers of attorney (s.3), and provides a form of
general power of attorney (s.10 and Sch.1). Depositing or filing of instruments creating powers
of attorney is not now necessary: s.2. The donee may normally execute any instrument, sign or
do any act in his own name: s.7 (as amended by the Law of Property (Miscellaneous
Provisions) Act 1989 s.4 and Sch.1). Guidance as to wording to be used for execution in the
attorney’s name is given in Yu Hing Tong Ltd v Fung Hing Chiu Cyril [2016] 5 H.K.L.R.D. 567.
Mental Capacity Act 2005 s.9 and Sch.1. See below, paras 31-168, 31-172.
(b) - Implied Agreement
There are cases in which agency may be implied, although no authority was ever specifically given in
fact. “While agency must ultimately derive from consent, the consent need not necessarily be to the
relationship of principal and agent itself (indeed the existence of it may be denied) but it may be to a
state of fact upon which the law imposes the consequences which result from agency”. 144 The most
usual way in which this occurs is by an unwritten request, or by implication from the recognition of the
principal of, or from his acquiescence in, the acts of another. 145 The conduct of both parties is
interpreted objectively: it is sufficient if the agent is reasonable in forming the opinion that he is
authorised. 146 On the other side therefore, the consent of the agent may be inferred from his acting
on behalf of the principal 147; but the mere fact that he does what was requested by the principal does
not necessarily mean that he does it on the principal’s behalf. 148
Branwhite v Worcester Works Finance Ltd [1969] 1 A.C. 552, 587, per Lord Wilberforce; see
also Pole v Leask (1862) 33 L.J.Ch. 155, 161-162.
Little v Spreadbury [1910] 2 K.B. 658; Hely-Hutchinson v Brayhead Ltd [1968] 1 Q.B. 549; see
also Garnac Grain Co Inc v HMF Faure & Fairclough Ltd [1968] A.C. 1130n., 1137; Swiss Air
Transport Co Ltd v Palmer [1976] 2 Lloyd’s Rep. 604; Townsends Carriers Ltd v Pfizer Ltd
(1977) 33 P. & C.R. 361 (landlord and tenant situation). But mere silence need not always
import acquiescence: Burnside v Dayrell (1849) 3 Exch. 244.
See Hudson Bay Apparel Brands LLC v Umbro International Ltd [2010] EWCA Civ 949 at [49],
[50], [2010] E.T.M.R. 15.
Roberts v Ogilby (1821) 9 Price 269; Moore v Peachey (1891) 7 T.L.R. 748.
Kennedy v De Trafford [1897] A.C. 180; Garnac Grain Co Inc v HMF Faure & Fairclough Ltd,
(c) - Ratification
An act done for another by a person not assuming to act for himself, but for such other person,
though without any precedent authority, may rank as the act of the principal if subsequently ratified by
him. 149
This can be regarded as a retrospective conferring of authority and much of its reasoning
proceeds on the basis of that analogy. Although it is here classified as a method of creation of
agency, it applies more frequently to persons already agents who are not authorised in the relevant
respect. It operates on the act ratified only and does not confer any future authority, though a series
of ratifications might give rise to apparent authority. 150 A purported ratification in advance can be no
more than a promise to ratify, enforceable if supported by consideration. Ratification is in principle to
be confined to situations where the third party did not at the time of contracting know that the agent
was unauthorised. At common law, situations where the third party did have such knowledge at the
time of contracting would require a different analysis. 151 Views vary as to whether or not the doctrine
is anomalous. It is certainly often convenient; but it requires safeguards to prevent unfair results.
Proof of ratification
Ratification will be implied from any act showing an intention to adopt the transaction, including
commencement of or pleading in an action at law on the transaction in question. 152 No action in
reliance is required. It may be inferred in appropriate cases even from silence or mere acquiescence
; and it seems clear that, like the grant of authority, it need not be communicated to the third
party. 154 But if an act is adopted at all, it will be held to have been adopted throughout. 155 Ratification
of a contract required to be in writing need not be in writing, 156 but ratification of a contract required to
be made by deed must be by deed. 157
Who can ratify
A contract can only be ratified by the person on whose behalf it was purportedly made: an
undisclosed principal cannot ratify. 158 But if the contract was purportedly made on behalf of a
principal, the fact that the agent actually intended to act for himself is irrelevant. 159 Despite difficulties
in earlier cases, it has been held in the context of insurance that an unidentified principal 160 may
ratify, and there seems no reason why this should not be true in all contexts, despite difficulties in
ascertaining the actual party for whom the agent acted. 161 But a person who was not in existence and
contemplated at the time a contract was made, e.g. a person who might in the future come within a
particular class, cannot do so, though he can be the beneficiary of a trust, 162 a third party beneficiary
of a contract 163 or perhaps the offeree of a unilateral contract. 164 It is not clear whether the personal
representatives of a deceased person may ratify contracts made on his behalf, but they can plainly
ratify contracts made for the estate. 165
It is often said that a person ratifying a contract must, at least in order to be bound, know fully of all
the material circumstances in which the act is done 166; so a principal does not ratify a wrongful
distress by receiving the proceeds of it unless he has full knowledge of the wrongful act, 167 and will
not be deemed to have ratified a voidable transaction if he did not know that it was voidable. 168 But
the principal will obviously be bound if he intends to ratify the act in any event; thus where an agent
had wrongfully signed a distress warrant and levied distress, and the principal, when informed, had
said that he would leave the matter in the agent’s hands, the principal was held to have ratified the
agent’s act and to be responsible for irregularities in the levying of the distress. 169 And the principal
may be liable even though he has no knowledge of the legal effect of the act ratified 170 or of collateral
matters affecting its nature, e.g. that a purchase amounted to a conversion. 171 It seems that this is
correctly analysed as an internal principle, i.e. one referable to the position between principal and
agent. Where a third party is involved, a lower degree of knowledge by the principal may entitle the
third party to rely on ratification: thus it has been said that he might do so despite the fact that the
principal in fact was unaware that the act was unauthorised, and hence that there was anything to
ratify. 172 Although it has been said that in such a situation what occurs is still ratification, 173 it is close
to estoppel. In general however the very broad nature of the internal rules as to ratification by conduct
will make estoppel, or similar reasoning directed only to the third party, unnecessary.
Capacity: void and voidable acts
The doctrine of ratification presupposes that the principal could validly have done the act at the time it
was done. Thus a company not formed at the time of the act, but formed before the time of purported
ratification, cannot ratify 174; and a person in some other way lacking capacity at the time of the
original act 175 cannot ratify. Beyond this, it is sometimes said that whereas a voidable act can be
ratified, a void one cannot, and this idea can be used to justify the proposition that a forgery cannot be
ratified. 176 But the word “void” is not helpful: almost any unauthorised act on behalf of another could
be called void, yet it is precisely such acts which are the subject matter of the doctrine of ratification.
The capacity cases can be explained as a separate category, and in the central case of forgery the
forger does not profess to act for but as another. 178
Effect of ratification between principal and agent
It is often said that the effect of ratification is to put all parties in the position in which they would have
been had the transaction been authorised. This is not entirely correct. The third party is entitled to
take advantage of the ratification with such a result against the principal, and the principal against the
third party: but it does not follow that the agent is freed from liability to the principal for exceeding his
authority. The principal might have ratified out of commercial necessity, to preserve his reputation, or
might have been held to have ratified as against the third party despite not being fully aware of the
circumstances. 179 It may therefore be necessary to determine whether the principal’s ratification as
regards the third party was a waiver or exoneration as regards the agent or not. 180
As stated above, as regards the third party a ratified transaction is valid as if authorised. Thus if an
action is commenced without authority and is not properly constituted, the plaintiff can ratify his
solicitor’s act, so that it is not open to the defendant to object that the action is not properly brought.
Ratification is effective notwithstanding that the person ratifying at first repudiated the act. 182 More
surprisingly it has been held that the retrospective effect of ratification may be such that a ratified
contract is valid even though the third party has between formation and ratification purported to
withdraw from it 183 unless it was made subject to ratification 184 or has been rescinded. 185 This rule,
often referred to as the rule in Bolton Partners v Lambert 186 is controversial, and is subject to various
limits, as appears from what follows.
It is plain that there must be some limits on the applicability of ratification, which is a sensible and
practical idea in many situations, but could give rise to obviously unfair results in others. There has
been little agreement, however, on what technique is to be used for this purpose. In the famous case
of Bird v Brown 187 it was held that stoppage in transitu could not be ratified after the transitus had
ended. This can be explained on the basis that to allow ratification would have been to divest a
property interest, that of the consignee; or more generally that it would allow a time limit to be
extended by ratification. The notion that a property interest cannot be divested by a ratification must
certainly, if confined to the strict sense of property rights and their validity against third parties, 188 be
correct, and may explain this case and another holding that the unauthorised exercise of an option
cannot be ratified after the expiry of the relevant period. 189 But the contractual aspect of the second
situation can be considered separately, and in general a time limit rule is too narrow to provide a
solution. There are in fact other situations where it is thought that ratification should be permitted even
though the effect is to extend a time limit. It has been said that ratification must be within a reasonable
time “which cannot extend after the time at which the contract is to commence”. 190 But although it has
been suggested that such a reasonable time rule should be the main control 191 there are numerous
dicta against the existence of such a rule. 192 It has fairly recently been held that ratification of an act
which if authorised would have prevented the limitation period from running is effective though it takes
place after the expiry of the period. 193 The question is elaborately discussed in this case (where many
different lines of reasoning are deployed) and in two more recent decisions, one not allowing
ratification, 194 the other permitting it. 195 What emerges from these three cases is that the matter can
only be solved by a general principle, of which even the property cases are perhaps to be treated as
examples, that ratification is not effective where to allow it would be unfairly prejudicial to the other
party. 196 On this basis, a ratification on which the ratifier does not rely against the third party might, in
some circumstances, be effective against the ratifier.
Wilson v Tumman (1843) 6 M. & G. 236, 242; Bird v Brown (1850) 4 Exch. 786; Firth v
Staines [1897] 2 Q.B. 70. For more modern formulations see Suncorp Insurance and Finance
Co Ltd v Milano Assicurazioni SpA [1993] 2 Lloyd’s Rep. 225; Yona International Ltd v La
Réunion Française Société Anonyme d’Assurances et de Réassurances [1996] 2 Lloyd’s Rep.
84, 103, 106. See in general Krebs, Agency Law in Commercial Practice (2016).
See below, para.31-056.
Normally, as a contract “subject to ratification”. See below, n.183; Watson v Davies [1931] 1 Ch.
455; Warehousing and Forwarding Co of East Africa v Jafferali & Sons [1964] A.C. 1; Bowstead
and Reynolds on Agency, 20th edn (2014), para.2-050.
Celthene Pty Ltd v WKJ Hauliers Pty Ltd [1981] 1 N.S.W.L.R. 606, 614. But this must perhaps
occur within a reasonable time: see below, para.31-034.
Bank Melli Iran v Barclays Bank (DCO) [1951] 2 T.L.R. 1057, 1063; see also Lyell v Kennedy
(1889) 14 App. Cas. 437. Ratification by acquiescence may be more difficult to establish in the
case of an executory contract than in the case of an executed one, for in the latter there may be
no choice but to take the benefit of the transaction. See, e.g. Foreman & Co Pty Ltd v The
Liddesdale [1900] A.C. 190. But a person who did not intend to ratify may in appropriate cases
be estopped from proving that he did not do so. See also Sino Channel Asia Ltd v Dana
Shipping and Trading Pte Singapore [2016] EWHC 1118 (Comm) (no ratification of arbitration
held without valid service (because of lack of authority to receive it), and hence without
participation, by inactivity after award made).
See Bowstead and Reynolds on Agency, 20th edn (2014), para.2-076; accepted in Pagnan
SpA v Feed Products Ltd [1987] 2 Lloyd’s Rep. 601, 613; Shell Co of Australia Ltd v Nat
Shipping Bagging Services Ltd (The Kilmun) [1988] 2 Lloyd’s Rep. 1, 8, 11, 14; AMB Generali
Holding AG v SEB Trygg Holding Aktiebolaget [2005] EWCA Civ 1237, [2006] 1 Lloyd’s Rep.
318 at [37].
Union Bank of Australia v McClintock [1922] 1 A.C. 240; Bank Melli Iran v Barclays Bank (DCO)
, above; Commercial Banking Co of Sydney v Mann [1961] A.C. 1. But where particular matters
can be separated out, the operation of this principle can give rise to difficulty: cf. Harrisons &
Crossfield Ltd v LNWR [1917] 2 K.B. 755; Hughes v Hughes (1971) 115 S.J. 911 (ratification of
sale of house does not cover contract with estate agent); Accidia Foundation Ltd v Simon C.
Dickinson Ltd [2010] EWHC 3058 (Ch) (ratification of sale does not involve ratification of
commission agreement); and see Canadian Laboratory Supplies Ltd v Engelhard Industries of
Canada Ltd [1979] 2 S.C.R. 787, 801 et seq.; (1979) 97 D.L.R. (3d) 1, 11 et seq.
Maclean v Dunn (1828) 4 Bing. 722; Soames v Spencer (1822) 1 D. & R. 32; Sheridan v
Higgins [1971] I.R. 291.
Hunter v Parker (1840) 7 M. & W. 322; Kidderminster Corp v Hardwick (1873) L.R. 9 Ex. 13
(unless a deed was not necessary in any case). But see Tupper v Foulkes (1861) 9 C.B.(N.S.)
797 (ratification treated as redelivery). As to ratification by companies see Bowstead and
Reynolds on Agency, 20th edn (2014), para.2-067.
Keighley, Maxsted & Co v Durant [1901] A.C. 240. As to undisclosed principals see below,
paras 31-063 et seq. It is surprising that this rule applies, as here, even though the agent is
clearly such (but has exceeded his authority) and the case is one where it is sought to hold the
ratifying principal liable, as opposed to one where he seeks to intervene or the person whose
act is purportedly ratified is not an agent of the ratifier at all.
Re Tiedemann & Ledermann Frères [1899] 2 Q.B. 66 (where the agent thought that the third
party would not deal with him personally so purported to act for another).
Below, paras 31-054, 31-089.
National Oilwell (UK) Ltd v Davy Offshore Ltd [1993] 2 Lloyd’s Rep. 582, 592-597; see
Reynolds in Rose, Consensus ad Idem (1996), p.77. Proof of the agent’s subjective intention to
act for the person concerned will be required. cf. below, para.31-054.
See Trident General Ins Co Ltd v McNiece Bros Pty Ltd (1987) 8 N.S.W.L.R. 270, 276-277
(insurance for “all contractors and subcontractors and/or suppliers”: plaintiffs not appointed at
time of insurance). But cf. Celthene Pty Ltd v WKJ Hauliers Pty Ltd [1981] 1 N.S.W.L.R. 606,
615. As to trust in this context, see A Tomlinson (Hauliers) Ltd v Hepburn [1966] A.C. 451
(bailee). See in general Bowstead and Reynolds on Agency, 20th edn (2014), para.2-065. In
the Trident case the contractor was held entitled to sue as third party beneficiary of a contract.
The actual decision was affirmed by the High Court of Australia without deciding on the agency
points: (1988) 165 C.L.R. 107.
Contracts (Rights of Third Parties) Act 1999 s.1(3).
cf. AM Satterthwaite Ltd v New Zealand Shipping Co Ltd (The Eurymedon) [1975] A.C. 154.
See Foster v Bates (1843) 12 M. & W. 226; Powell, Law of Agency, 2nd edn (1961), p.388.
De Bussche v Alt (1878) 8 Ch. D. 286, 313; cf. Brennan v O’Connell [1980] I.R. 13.
Lewis v Read (1845) 14 L.J. Ex. 295.
Savery v King (1856) 5 H.L.C. 627.
Haseler v Lemoyne (1858) 28 L.J.C.P. 103.
Powell v Smith (1872) L.R. 14 Eq. 85; AMB Generali Holding AG v SEB Liv Holding
Aktiebolaget [2005] EWCA Civ 1237, [2006] 1 Lloyd’s Rep. 318 at [34]-[47].
Hilberry v Hatton (1864) 2 H. & C. 822. See also Brennan v O’Connell [1980] I.R. 13 (ratification
of contract by estate agent).
This is suggested in ING Re (UK) Ltd v R&V Versicherung AG [2006] EWHC 1544 (Comm),
[2006] 2 All E.R. (Comm) 870 at [155]-[156], though the reliance was in fact held unjustified.
Suncorp Insurance and Finance v Milano Assecurazioni SpA [1993] 2 Lloyd’s Rep. 225,
243-235; and see Great Atlantic Insurance Co v Home Insurance Co [1981] 2 Lloyd’s Rep. 219,
Kelner v Baxter (1866) L.R. 2 C.P. 174. This result is in some countries changed by statute.
Capacity at the time of ratification is obviously required: Firth v Staines [1987] 2 Q.B. 70, 75.
Boston Deep Sea Fishing and Ice Co v Farnham [1957] 1 W.L.R. 1051; Kuenigl v
Donnersmarck [1955] 1 Q.B. 515 (alien enemies).
Brook v Hook (1871) L.R. 6 Ex. 89. See also Bedford Ins Co v Instituto de Resseguros do Brasil
[1985] Q.B. 966, 986-987 (“life cannot be given by ratification to prohibited transactions”). There
may have been some connection with problems regarding marriage settlements by infants,
which do not of course involve agency at all: see Edwards v Carter [1893] A.C. 360.
See Danish Mercantile Co v Beaumont [1951] Ch. 680 (unauthorised institution of proceedings
held not a nullity and ratifiable); Hooper v Kerr, Stuart & Co Ltd (1901) 83 L.T. 729
(unauthorised summoning of company meeting); Bamford v Bamford [1970] Ch. 212; Winthrop
Investments Ltd v Winns Ltd [1975] 2 N.S.W.L.R. 666 (voidable issue of shares); Alexander
Ward & Co Ltd v Samyang Navigation Co Ltd [1975] 1 W.L.R. 673 (arrest of ship);
Presentaciones Musicales SA v Secunda [1994] Ch. 271 (issue of writ); applied in Adams v
Ford [2012] EWCA Civ 544, [2012] 1 W.L.R. 3211.
This principle may have been lost sight of in English v English [2010] EWHC 2058 (Ch). But
unauthorised signature or affixing of a seal may also amount to forgery, and in this case there
probably can be ratification: see Campbell (1960) 76 L.Q.R. at 130 et seq.; M’Kenzie v British
Linen Co (1881) 6 App. Cas. 82, 99-100; Northside Developments Pty Ltd v Registrar-General
(1990) 170 C.L.R. 146, especially at 199-200. And a person may be estopped from setting up
forgery or want of authority: see Greenwood v Martins Bank Ltd [1933] A.C. 51; Fung Kai Sing v
Chang Fui Hing [1951] A.C. 489; Welch v Bank of England [1955] Ch. 508.
See above, para.31-030. See also below, para.31-112.
243-235; also Great Atlantic Insurance Co v Home Insurance Co [1981] 2 Lloyd’s Rep. 219,
Danish Mercantile Co v Beaumont [1951] Ch. 680.
Soames v Spencer (1822) 1 D. & R. 32. Unless there is prejudice to the third party, which might
give rise to estoppel: McEvoy v Belfast Banking Co [1935] A.C. 24, 45.
Bolton Partners v Lambert (1889) 41 Ch. D. 295 (but note that the case is often misunderstood:
at the time of withdrawal the third party did not know that the contract was unauthorised, but
appears to have thought that the stage of contract formation had not been reached); cf.
Kidderminster Corp v Hardwick (1873) L.R. 9 Ex. 13; Athy Guardians v Murphy [1896] 1 I.R. 65;
Fleming v Bank of New Zealand [1900] A.C. 577.
Watson v Davies [1931] 1 Ch. 455; Warehousing & Forwarding Co v Jafferali [1964] A.C. 1. In
such a case, of course, there would be no contract from which to withdraw. The “ratification”
would be an acceptance and would require notice: Jafferali’s case, at 9.
Walter v James (1871) L.R. 6 Ex. 124.
Above, n.182.
(1850) 4 Exch. 786. See The Borvigilant [2003] EWCA Civ 935, [2003] 2 Lloyd’s Rep. 520 at
[79] et seq.
And hence not taking in notions operating only between the parties such as an accrued cause
of action (see The Borvigilant, above at [89]) or an accrued defence (see Smith v
Henniker-Major & Co [2002] EWCA Civ 762, [2003] Ch. 182 at [71]).
Dibbins v Dibbins [1996] 2 Ch. 348. See also Re Construction Forestry Mining and Energy
Union (1994) 181 C.L.R. 539, 545 (act must be valid and effective when done).
Metropolitan Asylums Board v Kingham & Sons (1890) 9 T.L.R. 217, 218, per Fry L.J.
C.-H. Tan (2001) 117 L.Q.R. 626.
See Celthene Pty Ltd v WJK Hauliers Ltd [1981] 1 N.S.W.L.R. 606, 615; Bedford Ins Co Ltd v
Instituto de Resseguros do Brasil [1985] Q.B. 966, 986-987.
Presentaciones Musicales SA v Secunda [1994] Ch. 271.
Smith v Henniker-Major & Co [2002] EWCA Civ 762, [2003] Ch. 182 (no ratification of deed of
assignment three years after execution).
The Borvigilant [2003] EWCA Civ 935, [2003] 2 Lloyd’s Rep. 520 (ratification by subcontractor
of clause conferring immunity).
See Smith v Henniker-Major & Co, above, at [71]; The Borvigilant, above, at [70], [78], [79],
(d) - Agency of Necessity
A number of decisions establish a doctrine whereby one person may in circumstances of
emergency be regarded as empowered to act for another without prior authorisation. The traditional
examples are those of the shipmaster, who has (or had) wide powers to contract on behalf of the
shipowner 197 (or demise charterer) and also in some cases on behalf of the cargo owner 198
of the person who accepts a bill of exchange for the honour of the drawer. 199 Strict rules of quite
ancient origin are usually attributed to this type of agency, though they are really relevant only to the
shipmaster and not to the acceptor for honour. It must be impracticable for the agent to communicate
with the principal 200; the steps taken must be necessary for the benefit of the principal 201; and the
agent must act bona fide in the interests of the principal. 202 The requirement of impracticability of
communication suggests that the authority does not exist if the principal had forbidden the act in
advance. 203
First type of case
As will be seen from the two main examples, the cases are in fact of two different types. The first type
involves an agent who purports to bind his principal by contract. It has been suggested that the term
“agency of necessity” should be restricted to such situations, and that it is in such cases only that the
strict requirements mentioned above are applicable. 204 Where the person concerned is already an
agent, it may be possible to say that there is a general implied authority to act appropriately in an
emergency, 205 regardless of the rather rigid ancient requirements for agency of necessity. 206 It was
however fairly recently held that a master can only bind the cargo owner (as opposed to shipowner)
by signing a salvage agreement when the requirements of the ancient rules are satisfied: thus the
contract was not binding on that person where he could have been consulted. 207 The law on this point
was determined by statute in 1994, under which the master has authority to sign a salvage agreement
for cargo. 208 But the reasoning of the case suggests that where the person acting does not already
have an agency relationship, authority of an abnormal sort only arises by operation of law under the
old agency of necessity rules. It is however doubtful whether this should be so: the rules antedate the
development of the modern principles of apparent and even implied authority, and if it is correct that
they do not apply if the principal has forbidden the act, they should on more modern analysis be
based on some form of implied, and hence apparent, authority. Further, though the master may have
no relationship with the cargo owner, he is employed by the shipowner, who is bailee of the cargo:
and the powers of a bailee have been established in the second type of case, as appears below. The
difference between the traditional strict and a more general approach in such cases would not
normally be great. 209 But it could be significant where one of the rather specific requirements is not
fulfilled but the third party has no way of knowing that. If such a case arose the whole doctrine might
merit reconsideration at the highest level. 210
Second type of case
The second type of case covers situations where one party deals in some way on another’s behalf
and claims protection against an action for interference with the other’s property, or goes further and
seeks reimbursement for the cost of so acting. This type of situation raises restitutionary issues and is
similar to the negotiorum gestio of Roman law. It seems that here the conduct will be more easily
justified if there is already a pre-existing relationship between the parties, whether of agency or of
some other sort such as that of bailor and bailee. 211 Thus it has recently been held that a salvor was
entitled to reimbursement from the cargo owner for warehousing cargo after the termination of the
salvage services, although it had not been impracticable to communicate with the cargo owner and it
was at least arguable that the salvor had acted partly in his own interest, to preserve his lien. 212 So
also carriers have been held entitled to reimbursement for expenses incurred in stabling uncollected
horses, 213 and it has been implied that they would have a defence to an action of conversion if they
disposed of perishable goods in circumstances of necessity. 214 It can also be said that there may in
such cases be an actual duty on the bailee to act in the bailor’s interests, 215 which justifies his action
and entitles him to reimbursement. 216 In the absence of such an existing relationship, however, there
) entitling a
is at present no general principle (outside the specialised area of marine salvage 217
person who protects or benefits the property of another to reimbursement or even to a lien. 218
Whether the cases on the acceptor for honour should be extended, with certain other miscellaneous
cases, or some other line of reasoning employed to give such a right is a question for the law of
But it is true that in some of the cases in which the existence of such a general right
restitution. 219
was denied, the matter was not really in issue, since any necessity concerned the interests of the
agent rather than the principal. 220
See The Australia (1859) 13 Moo. PCC. 132 (sale of ship); The Renpor (1883) 8 P.D. 115
(salvage). As to hypothecation see The Karnak (1869) L.R. 2 P.C. 505.
Australasian SN Co v Morse (1872) L.R. 4 P.C. 222 (sale of cargo). As to hypothecation see
The Karnak, above. As to salvage see The Renpor, above; Merchant Shipping Act 1995
s.224(1) and Sch.11 art.6. And see in general Scrutton on Charterparties, 23rd edn (2015), Arts
139–142.
Bills of Exchange Act 1882 s.65; below, para.34-142. See Hawtayne v Bourne (1841) 7 M. & W.
595, 599.
Springer v GW Ry [1921] 1 K.B. 257, 265; cf. Prager v Blatspiel, Stamp and Heacock Ltd [1924]
1 K.B. 566, 571. See also John Koch Ltd v C & H Products Ltd [1956] 2 Lloyd’s Rep. 59.
Modern communications make such impracticability less common. But even where modern
methods are available, it may be impracticable to communicate with, say, 250 holders of bills of
Prager v Blatspiel, Stamp and Heacock Ltd, above, at 571-572. It is enough if a reasonable
man would think that there was a necessity: Tetley & Co v British Trade Corp (1922) 10 Ll.L.
Rep. 678.
Prager v Blatspiel, Stamp and Heacock Ltd, above, at 572-573.
But see Graanhandel T Vink BV v European Grain and Shipping Ltd [1989] 2 Lloyd’s Rep. 531,
China Pacific SA v Food Corp of India (The Winson) [1982] A.C. 939, 958.
e.g. De Bussche v Alt (1878) 8 Ch. D. 286 (subdelegation); Montaignac v Shitta (1890) 15 App.
Cas. 357 (unusual terms); Gokal Chand-Jagan Nath v Nand Ram Das-Atma Ram [1939] A.C.
106 (giving credit); cf. John Koch Ltd v C & H Products Ltd [1956] 2 Lloyd’s Rep. 59 (no
authority to cancel contract).
See the reasoning employed in The Unique Mariner [1978] 1 Lloyd’s Rep. 438.
The Choko Star [1990] 1 Lloyd’s Rep. 516; The Pa Mar [1999] 1 Lloyd’s Rep. 338, 341-342.
Merchant Shipping Act 1995 s.224(1) and Sch.11, implementing a Convention of 1989; applied
in The Altair [2008] EWHC 612 (Comm), [2008] 2 All E.R. (Comm) 805.
Some but not all of the problems could be solved by reasoning such as that used in United
Bank of Kuwait v Hammoud [1988] 1 W.L.R. 145; below, para.31-056 n.336.
See Bowstead and Reynolds on Agency, 20th edn (2014), para.4-008.
China Pacific SA v Food Corp of India (The Winson) [1982] A.C. 939 at 960-961. See Jebara v
Ottoman Bank [1927] 2 K.B. 254, 270-271; reversed on other grounds [1928] A.C. 269.
China Pacific SA v Food Corp of India, above: see at 964-966.
GN Ry v Swaffield (1874) L.R. 9 Ex. 132.
Sims & Co v Midland Ry Co [1913] 1 K.B. 103; cf. Springer v GW Ry [1921] 1 K.B. 257 (no
necessity). A bailee may now have power to sell under s.12 of the Torts (Interference with
Goods) Act 1977, but this would not always be adequate in emergencies.
Notara v Henderson (1872) L.R. 7 Q.B. 225; GN Ry v Swaffield, above.
Petroleo Brasileiro SA v ENE 1 Kos Ltd [2012] UKSC 17, [2012] 2 A.C. 164 at [18] et seq.
(carrier in possession of cargo after ship withdrawn from charterparty); Cargo ex Argos (1873)
L.R. 5 P.C. 134; Garriock v Walker (1873) 1 Rettie 100 (where the cargo owner knew what was
being done and did not acquiesce). See also as to agency of bailees Tappenden v Artus [1964]
2 Q.B. 185.
See Goff and Jones, Law of Unjust Enrichment, 9th edn (2016), Ch.18.
Nicholson v Chapman (1793) 2 Hy.Bl. 254; Falcke v Scottish Imperial Insurance Co (1886) 34
Ch. D. 234; but see Vol.I, para.29-142. However, limited powers are conferred by the Mental
Capacity Act 2005 s.9, which may enable a person acting for the benefit of a mentally incapable
person to pledge his credit (relevant to the first type of agency of necessity) and to obtain
reimbursement (relevant to the second).
See Goff and Jones, Law of Unjust Enrichment, 9th edn (2016), Ch.17; Burrows, Law of
Restitution, 3rd edn (2011), pp.470 et seq.; Vol.I, paras 29-1136 et seq.
Falcke v Scottish Imperial Insurance Co, above; Sachs v Miklos [1948] 2 K.B. 23, 26. See also
Munro v Wilmott [1949] 1 K.B. 295; Coldman v Hill [1919] 1 K.B. 443; Ridyard v Roberts
Unreported May 16, 1980 CA.
(e) - Capacity
Capacity to act as principal
As a general rule a person has capacity to authorise an agent, or to ratify the acts of one purporting to
act as an agent, where the act can be done by an agent and the principal would have capacity to
make the contract or to do the act himself. Thus a corporation could not in former times appoint an
agent to act outside the scope of its charter or memorandum of association, 221 and an alien enemy
may not normally appoint an agent at all. 222 A minor may appoint an agent: it has been said that
“whenever a minor can lawfully do an action on his own behalf, so as to bind himself, he can instead
appoint an agent to do it for him”. 223 It was sometimes said that he cannot execute a power of
attorney 224: but the true position may be rather that any deed disposing of property executed by an
agent so appointed is voidable by the minor as if he had executed it himself 225 —“An infant cannot
appoint an agent so as to bind him irrevocably”. 226 There is support for the view that a mentally
disordered person incapable of understanding what he is doing, on the other hand, can neither
execute a power of attorney 227 nor (perhaps) appoint an agent at all, 228even though the contract
made by the agent would, if made by the principal himself, have been voidable only. 229 But it is not
clear that this is the best solution, and the whole area may require reconsideration. 230
Capacity to act as agent
A contract made by an agent as such, is, in law, the contract of the principal. The agent is considered
merely as the medium by which the contract is effected; and his assent is merely the assent of his
principal. He need not, therefore, be a person himself having full contractual capacity so long as he
can understand what he is doing. 231 But any liability to his principal in contract would depend on his
contractual capacity: so, probably, should his contractual liability to the third party. 232 A party to a
contract may not be able to act as agent for the other party: thus it was held that one party to the
contract cannot sign the agreement or memorandum as agent for the other so as to bind the other for
the purposes of s.40 of the Law of Property Act 1925. 233 This rule presumably survives the Law of
Property (Miscellaneous Provisions) Act 1989, under which the contract must itself be in writing,
signed by or on behalf of each party to it. 234 This is not however a rule of capacity but of statutory
31-040
As a matter of the general law on capacity, however, an agent for one party may act as agent of the
other party also, provided he acts within his obligations to his principal. 235 There is again no formal
incapacity so to act. There are however many judicial warnings as to the danger of the practice, 236 for
such an agent may be the subject of a conflict of interests, and hence potentially at least in breach of
his fiduciary duty to one of his principals. 237 Hence a transaction entered into may sometimes be
voidable at the instance of that principal 238; though sometimes an act done by the agent may be valid
though wrongful. 239
Montreal Assurance Co v M’Gillivray (1859) 13 Moo. P.C.C. 87; Ashbury Railway Carriage Co
Ltd v Riche (1875) L.R. 7 H.L. 653. And see Re Banque des Marchands de Moscou [1952] 1 All
E.R. 1269 (dissolved foreign corporation can have no agent of necessity). But this principle is
modified in its operation by s.39 of the Companies Act 2006: below, para.31-059.
Sovfracht, etc. v Van Udens, etc. [1943] A.C. 203; Boston Deep Sea Fishing & Ice Co v
Farnham [1957] 1 W.L.R. 1051. But cf. Lepage v San Paulo Copper Estates Ltd (1917) 33
T.L.R. 457 (agent appointed by foreign court); Hangkam Kwingtong Woo v Liu Lan Fong [1951]
A.C. 707.
G(A) v G(T) [1970] 2 Q.B. 643, 652, per Lord Denning M.R., limiting earlier dicta of his own in
Shephard v Cartwright [1953] Ch. 728, 735.
Cases sometimes cited are Zouch d Abbott and Hallett v Parsons (1765) 3 Burr. 1794; Oliver v
Woodroffe (1839) 4 M. & W. 650. See also Gibbons v Wright (1954) 91 C.L.R. 423, 447 et seq.
But a person under the age of 18 cannot create a lasting power of attorney: Mental Capacity
Act 2005 s.9(2)(c).
See Edwards v Carter [1893] A.C. 360. The position as to di