Agency in English law
Agency in English law is the component of UK commercial law that deals with the application of agency law in the United Kingdom, and forms a core set of rules necessary for the smooth functioning of business. In 1986, the European Communities enacted Directive 86/653/EEC on self-employed commercial agents. In the UK, this was implemented into national law in the Commercial Agents Regulations 1993. Authority. An agent who acts within the scope of authority conferred by their principal binds the principal in the obligations the agent creates with third parties. There are essentially two  kinds of authority recognised in the law: actual authority (whether express or implied) and apparent authority. Actual authority. Actual authority can be of two kinds. Either the principal may have expressly conferred authority on the agent, or authority may be implied. Authority arises by consent, and whether it exists is a question of fact. An agent, as a general rule, is only entitled to indemnity from the principal if they have acted within the scope of their actual authority, and if they act outside of that authority they may be in breach of contract, and liable to a third party  for breach of the implied warranty of authority. Express actual authority means an agent has been expressly told (i.e., explicitly told) they may act on behalf of a principal. Implied actual authority, also called "usual authority", is authority an agent has by virtue of being reasonably necessary to carry out their express authority. As such, it can be inferred by virtue of a position held by an agent. For example, partners have authority to bind the other partners in the firm, their liability being joint and several, and in a corporation, all executives and senior employees with decision-making authority  by virtue of their position have authority to bind the corporation. Apparent authority. Apparent authority (also called "ostensible authority") exists where the principal's words or conduct would lead a reasonable person in the third party's position to believe that the agent was authorized to act, even if the principal and the purported agent had never discussed such a relationship. For example, where one person appoints a person to a position which carries with it agency-like powers, those who know of the appointment are entitled to assume that there is apparent authority to do the things ordinarily entrusted  to one occupying such a position. If a principal creates the impression that an agent is authorized but there is no actual authority, third parties are protected so long as they have acted reasonably. This is sometimes termed "agency by estoppel" or the "doctrine of holding out", where the principal will be estopped from denying the grant of authority if third parties have changed their positions to their detriment in reliance on the representations made. Section::::"Watteau v Fenwick". In the case of "Watteau v Fenwick", Lord Coleridge CJ on the Queen's Bench concurred with an opinion by Wills J  that a third party could hold personally liable a principal who he did not know about when he sold cigars to an agent that was acting outside of its authority. Wills J held that "the principal is liable for all the acts of the agent which are within the authority usually confided to an agent of that character, notwithstanding limitations, as between the principal and the agent, put upon that authority." This decision is heavily criticised and doubted, though not entirely overruled in the UK. It is sometimes referred to as "usual authority" (though not in the sense used by  Lord Denning MR in "Hely-Hutchinson", where it is synonymous with "implied actual authority"). It has been explained as a form of apparent authority, or "inherent agency power". Principal and agent relations. Reciprocal duties of principals and commercial agents. The Commercial Agents Regulations require agents to act “dutifully and in good faith” in performing their activities (Reg. 3); co-extensively, principals are required to act “dutifully and in good faith” in their “relations” with their commercial agents (Reg 4). Though there is no statutory definition of this obligation to act “dutifully and in good faith”, it has been suggested that  it requires principals and agents to act "with honesty, openness and regard for the interests of the other party to the transaction".