Agency Ostensible Authority Definition
The term “presumed authority” is used as a synonym for “apparent authority”. n. a person who has given the appearance of being an employee or (representative) acting for another (principal), which would reasonably lead anyone dealing with the alleged agent to believe that he/she is an employee or representative. This could include giving the alleged agent stationery or company forms, allowing them to use the company`s truck, phone or office in the company`s office. Companies must be careful not to allow such situations in which an alleged agent could bind the company to a contract or hold the apparent employer liable for damage caused by an accident, defamation or attack by the “agent”. Superficial authority refers to “apparent authority,” where an agent appears to have the power to act (not necessarily the actual authority to do so). In agency law, if a person appears to be duly authorized to represent a business entity, company or individual, that person (the agent) has the “presumed power” to legally bind the company or companies. Actual authority includes explicit authority and implied authority (not to be confused with implied appointment, i.e. appointment by forfeiture). The rule in the case of Turquand does not allow a third party to force the company itself to an unauthorized transaction. It allows a third party to assume that a transaction that falls within the jurisdiction of the directors has been duly approved, but it requires the third party to establish the fact of a real or obvious authority. In Freeman and Lockyer v. Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480, the director in question managed and acted on behalf of the company`s property and, as such, instructed the applicant architects to draw up plans for the development of the company`s owned land.
The development eventually collapsed and the plaintiffs sued the company for their fees. The company denied that the director was allowed to employ the architects. The court concluded that, although he was never appointed chief executive officer (and therefore had no real, express or implied authority), his actions fell within his presumed authority and the board of directors was aware of and consented to his conduct. Diplock LJ has identified four factors that must be present before a company can be bound by the actions of an agent who is not authorized to do so; It must be proved that: In law, apparent authority refers to the authority of an agent as it appears to others,[4] and it can serve both to extend real authority and to create authority where there is no real authority. [5] Company law and presumed authority are in reality only a subset of the rules on apparent authority and agency law in general, but because of the prevalence of the issue over company law (companies that are artificial persons are still only able to act through their human agents). It has developed its own specific case law. However, some jurisdictions use the terms interchangeably. The Act, which covers alleged agents, is mainly codified in the Companies Act 2001 (Cth) in Section 129(3) as well as in the State Partnerships Acts. Laws require partnerships, businesses and employers to ensure that third parties correctly understand the scope of the client`s agents. In cases where a representative leaves the store, the principal may be held liable for the actions of that former agent if the principal has not informed third parties dealing with the company that the authority has ceased and that the former agent has claimed as if he remained a representative. The circumstances, as well as a person`s actions, behaviour, statements and manifestations, may lead a reasonable person to believe that they have the power to act (and possibly legally bind) another person. There must be a deliberate act or omission on the part of the customer – if the agent acts alone to give the third party this false impression, then the customer is not bound.
[2] However, the client is liable if the representative acts in this manner in the presence of the client and the client remains silent and says nothing to prevent the third party from believing that the representative has the power to bind the client. An apparent power of attorney may also exist if a client terminates the power of attorney of an authorized representative, but does not notify third parties of such termination. This is called persistent apparent authority. Contractors may avoid liability by publicly announcing the termination of the power of attorney and by communicating with individual third parties who would have had reason to learn of the existence of such authorization. The term presumed authority means that someone seems to have the power to do something on behalf of another. Apparent power should not be undermined by restrictions on the execution or powers of the company in the articles of association, although in many countries it is reduced by corporate law reforms that abolish or restrict the application of the ultra-vires doctrine to companies. [8] However, the legislative reforms do not affect the general principle that a third party cannot invoke presumed authority if he or she is aware of a restriction that prevents the authority from emerging or being investigated into the scope of a person`s authority. [9] In certain circumstances, the nature of a transaction would require that an individual would be interviewed.
[10] Also known as apparent authority, the alleged authority is the authority that would have been obtained from a principal in the eyes of a reasonable third party by reason of the client`s conduct, omissions or representations (Hely-Hutchinson v. Brayhead Ltd). An express power of attorney is the power of attorney that the client has expressly granted to the authorized representative orally or in writing. The agent must have been arrested by a person with actual authority to complete the transaction, and an agent cannot impersonate an authoritarian for this purpose. [6] The company`s actions as principal must constitute assurance (express or behavioral) that the representative had a specific power of attorney and must be reasonably understood by the third party. In determining whether the contractor has presented his representative as authorized, the court must consider the entire conduct of the business. [7] The most common form of withholding is to allow the agent to act in the course of carrying on the corporation`s business, and in many cases this simply stems from the fact that the representative is authorized to use a specific title such as “CFO”. In other words, from the point of view of a third party, one person seems reasonably to have the power to bind another.
The agent`s conduct is irrelevant, nor is the actual authority that the officer may have granted him. Superficial authority is closely linked to the doctrines of free will and confiscation. It often occurs in partnerships, businesses and employer-employee relationships and becomes a complex issue in which the client tries to avoid liability for the actions of a director, officer or partner (alleged representative) if that person has acted outside of his or her actual jurisdiction, created an undesirable obligation for the client or cast an unfavourable image on the client. For corporations,[2] the apparent authority of the directors, officers and representatives of the corporation is generally referred to as “alleged authority.” Obvious questions of authority also arise in the context of the Fourth Amendment, which concerns who is allowed to consent to a search. [3] The procuring entity is free to ratify an unauthorized agreement entered into by a representative. Ratification is the express or implied act of the client who, after the unauthorized act, consents to the act of the representative.