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Hi Mike,
I’d like you to shed more light on the apparent authority of an agent. Especially, with regards to the 5 points under wider authority of such agent. Would appreciate using an example to explain these 5 points.
Thank you.
Are you referring to the 5 bullet points on page 54 of the course notes?
We’re in a situation where, for example, a director of a company has exceeded her authority and, as a result, the company is facing legal action from an innocent third party who has relied upon the authority of the rogue director. Crucially, it is relevant that the company was aware of the ultra vires actions of the director but allowed her to continue
The notes state that ‘the entity (and not just the director) represents the agent as having wider authority’. It’s no good the company knowing that the director doesn’t have the authority to take the actions that are now in dispute. The fact is that (effectively) the company is saying (by their omission to prevent it) that the director DOES HAVE the necessary authority
Continuing: ‘such representation should be one of fact, not of law’. We’re not looking at the legal niceties of the appointment of agents and whether our rogue director was / was not ‘properly’ appointed. We are instead considering the actions / inactions of not only the director herself but also those actions / inactions of the company
‘The representation shall be made direct to the third party and not, therefore, to someone else’
If I am the victim of this director’s abuse of power as a result of the company’s representation as to the director’s authority, that representation should be made direct to me and not, for example, to you who later told me of this director’s authority‘The third party must show that they relied upon this representation’. Basically, would I have entered into this situation if I had not believed the rogue director to have the necessary authority?
‘And must have acted upon that representation’. I could be told that a director has authority and that if I had wanted, or felt so inclined, that would have persuaded me to go ahead with a contract. But if I didn’t go ahead with a contract, what does it matter to me whether the woman’s authority was valid? If I don’t act, I don’t lose and thus would have no claim against either the company or the director herself
Does that lot make sense to you?
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