Chapter 20 Agency - Chapter 20 Agency Hely-Hutchinson v...

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Chapter 20 Agency Hely-Hutchinson v Brayhead Ltd and Anor [1968] Issue: Agency; implied & ostensible authority through appointment Facts: It was Mr Richards’ practice, which the board accepted, to contract for the defendant company, Brayhead Ltd, and tell the board later. He was the chairman and CEO, or de facto MD, of this electronics business. He guaranteed on the company’s behalf, repayment of money owed to Lord Suirdale ( Richard Michael John Hely-Hutchinson ) and indemnify Lord Suirdale against losses, for injecting money into his company, Perdio Electronics Ltd, which Brayhead was in the process of taking over. Lord Suirdale got a place on Brayhead’s board. But Perdio was in trouble and not saved by the extra cash injections. It went into liquidation, Lord Suirdale resigned from Brayhead Ltd’s board and sued for the losses he had incurred . Brayhead refused to pay on the basis that Mr Richards had no authority to make the contract. Verdict: Mr. Richards did have actual authority because the fact that the board had let Mr Richards continue to act had in fact created actual authority and ostensible authority . It is implied when it is inferred from the conduct of the parties and the circumstances of the case, such as when the board of directors appoint one of their number to be managing director . They thereby impliedly authorise him to do all such things as fall within the usual scope of that office. Actual authority, express or implied, is binding as between the company and the agent, and also as between the company and others, whether they are within the company or outside it. Appointment confers both actual and ostensible authority . Other people who see him acting as managing director are entitled to assume that he has the usual authority of a managing director. Keighley, Maxsted & Co v Durant Issue: requirements for ratification; third party must know agent was contracting for principal. The agent must purport to act as agent for the principal who is in contemplation. He must not allow the third party to believe that he himself was actually the principal Facts: An agent was authorized to purchase wheat on a joint account for himself and the defendants. Acting in excess of authority , the agent purchased it at a higher price from the plaintiffs without disclosing that he was also buying on behalf of the defendants .
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The defendants ratified the purchase the next day but failed to take delivery of the wheat. Plaintiff sues the principal for breach of contract. Verdict: Principal not under contractual obligation to plaintiff Ratification was ineffective since the agent contracted in his own name. Yongnam Development Pte Ltd v Springleaves Tower Ltd and Another [2004] Freeman & Lockyer v Buckburst Park Properties (Mangal) Issue: Ostensible authority Facts: Mr Freeman and Mr Lockyer sued Buckhurst Park Ltd and its director, Shiv Kumar Kapoor, for unpaid fees for their architecture work on developing the ‘Buckhurst Park Estate’ . The company’s articles said that all four directors of the
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