(c) Ostensible/apparent authority
This type of authority, which is an aspect of agency by estoppel, can arise in two distinct ways:
(i) Where a person makes a representation to third parties that a particular person has the authority to act as their agent without actually appointing them as their agent. In such a case the person making the representation is bound by the actions of the ostensible/apparent agent. The principal is also liable for the actions of the agent where they are aware that the agent claims to be their agent and yet does nothing to correct that impression.
(ii) Where a principal has previously represented to a third party that an agent has the authority to act on their behalf.
Even if the principal has subsequently revoked the agent’s authority they may still be liable for the actions of the former agent unless they have informed third parties who had previously dealt with the agent about the new situation (Willis Faber & Co Ltd v Joyce (1911)).
In Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd (1964), although a particular director had never been appointed as managing director, he acted as such with the clear knowledge of the other directors and entered into a contract with the plaintiffs on behalf of the company. When the plaintiffs sought to recover fees due to them under that contract it was held that the company was liable: a properly appointed managing director would have been able to enter into such a contract and the third party was entitled to rely on the representation of the other directors that the person in question had been properly appointed to that position. |
