Paper Topic:
Commercial Law (1)
COMMERCIAL LAW ASSIGNMENT 1a . Apparent Authority Apparent authority is a term used in Agency Law to describe a condition wherein a third person is led by the principal to suppose that the agent has sufficient authority to bind the principal , even if the agent does not have authority (Wikipedia , 2006 . Because of such act on the part of the principal , he becomes liable to those third persons with whom the agent transacted with . This is in effect a deviation from the rule that an agent must act within the scope of his
authority so that his actions may bind the principal . As enunciated in the case of Angerosa vs . The White Company , so far as third persons are concerned , the scope of an agent 's authority does not only speak of the actual authority conferred upon him by the principal , but also those which has apparently or impliedly been delegated to him by the principal (210 N .Y .S .204 (1936 Thus , while generally the principal should not be liable for acts of the agent done beyond the scope of his authority , the concept of apparent authority becomes the exception . The principal becomes liable to third parties if he permitted the agent to perform certain actions in a manner so as to appear to third persons that he had authority to perform such acts
As an illustration of this concept , if A customarily sends B to C for purposes of purchasing raw materials , then A cannot later on evade any action of C for payment of said purchases on the ground that it has not granted B any authority to make said purchases . Although a third person when dealing with an agent , is generally mandated to inquire on the nature and extent of the agent 's authority , the same cannot be said when the acts of the principal sensibly presents the impression that a certain person has been granted by him authority to act as his agent Thus , in the illustration given , A 's act , of habitually and regularly sending B to C to make purchases , is enough to lead C in believing that B is A 's agent and that the former is clothed by authority to make said purchases
1b . Todd Ltd 's liability to Smiths Ltd
Todd Ltd . is liable to Smith Ltd . For the value of the goods that Ian acquired . Although it is true that Ian , at the time he made the purchases , was no longer an agent of Todd Ltd , the latter cannot escape liability to Smiths by the expedient means of invoking Ian 's termination from the company . It must be noted that when Todd Ltd . decided to terminate the services of Ian , it did not inform Smiths Ltd . of such termination . It has been settled , under the principle of apparent authority , that the principal is bound by the acts of the agent , even if the same were done beyond the ambit of authority , if the principal led third persons to believe that...
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