| Monograph : Agency Law |
Contents |
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| (4)
Types of authority |
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1. |
Actual authority |
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| a. |
Actual authority includes express
authority and implied authority (not to be confused
with implied appointment, that is, appointment
by estoppel).
Express authority
is the authority which the principal has expressly
given to the agent whether orally or in writing.
Implied authority
(sometimes described as usual authority)
is the authority of an agent to do acts which
are reasonably incidental to and necessary for
the effective performance of his duties. The content
of implied authority depends on the facts of each
case and is sometimes determined by the usages
and customs of a trade, business or profession.
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| b. |
The scope of the actual authority
of the agent is therefore to be ascertained from
the oral or written agreement between principal
and agent, usage and customs of the relevant trade,
profession or business and the course of dealing
between the two parties. |
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| c. |
If the agent enters into a contract
with a third party pursuant to his actual authority,
the contract entered into will create contractual
rights and liabilities between the principal and
the third party. |
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2. |
Apparent or ostensible authority |
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| a. |
An agent is said to have apparent
or ostensible (not actual) authority if: |
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| i. |
The principal has made a representation
(whether by words or conduct) to the third
party to the effect that the agent has the
authority to act for him although the agent
does not in fact have such authority; |
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| ii. |
The third party has in fact
relied on such representation to deal with
the agent; and |
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| iii. |
The third party has altered
his position resulting from such reliance,
for example, assuming obligations under a
contract with the agent. |
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| b. |
In essence, apparent or ostensible
authority is authority which the principal induces
a third party to believe the agent has when the
agent in fact has not. The agent has only the appearance
of authority, but no actual authority to act on
behalf of the principal. Nevertheless, if the third
party enters into a contract with the agent in reliance
on the principal's representation, that contract
will still be legally binding on the principal.
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| c. |
Apparent or ostensible authority
will give rise to agency by estoppel (discussed
in section 3(2) above). The principal's representation
to the third party as to the authority of the agent
to act on his behalf, when acted upon by that third
party by entering into a contract with the agent,
operates as an estoppel which prevents the principal
from denying that such contract is binding upon
him. |
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