june 2011 question 9

I’m not sure that I could distinguish between “apparent” and “implied” nor even “ostensible”

Try this:-

It is true that actual authority and apparent authority are quite independent of one another. An actual authority is a legal relationship between the principal and agent created by an agreement to which they alone are parties. It may be express, when it is given by express words like passing of resolution by the board of directors authorizing a director to employ architects. It is implied when it is concluded from the conduct of the parties or the circumstances of the case, such as when the board of directors appoint one of them as managing director. On the other side, apparent authority is the authority which an agent appears to others to have as a result of some representation or conduct by the principal intended to be acted upon the third party. (Shum, 1989)

From the above passage, it is clear that actual authority depends upon the agreement between the principal and the agent, whereas apparent authority depends upon the representation made by the principal to the third party. Hence, both types of authority are not dependant on each other.

The above statement is more precisely construed by Lord Denning in his decision of Hely-Hutchinson case. He finds this case quite similar to Freeman and Lockyer case. In that case, the chairman was held to have implied actual authority whereas, in latter case, Mr Kapoor was held to have apparent authority. Lord Denning MR held in the Hely-Hutchinson case that, “Ostensible or apparent authority is the authority of an agent as it appears to others. It often coincides with actual authority”. He identified it in Hely-Hutchinson v Brayhead Ltd that, the chairman acting as an appointed managing director by the board had apparent authority as well as implied actual authority. This case demonstrated that the two types of authority often overlap thus creating confusion between the scope of actual authority and apparent authority. (Maclntyre, 2008)

OK?