Authority of an Agent Under Agency

       1.       Actual Authority of an Agent

The scope of an agent’s actual authority is important. Generally,  it is only if an agent cuts within actual authority that h is able to claim an indemnity from the principal for any expenses incurred or remuneration under the agency contract with the principal.In the same vein, an agent who acts outside this actual authority may be liable to the third party for breach of the implied authority. The actual authority of an agent is determined be the agreement between the principal and the agent. It is a matter of content construction. Two types of actual authority exist.

       a.      Express Actual Authority

This is the authority, which the principal  expressly gives to  the agent.  An example is where the agent is instructed to sell a particular properly for the principal. See: ELECTRONICS LTD V AKHTER COMPUTER LTD (2001) 1/BCLC/433

       b.      Implied (or Incidential) Actual Authority

In addition to express actual authority, the agent may have  implied  actual authority. However, implied authority cannot contradict express actual authority because it is only a way of filling the gaps in the agency agreement. It is not a means of altering that agreement.

An agent may have implied authority of his principal in the following ways:

                      i.            To do things that are necessarily incidental to the  execution of  the express actual authority.

                    ii.           To undertake that which is implied from the particular circumstance of the relationship between him and the principal such as where there has been a previous course of dealings.

Such authority as is customarily enjoyed by dealings in the particular market. A custom must be uniform certain, notorious (generally known), recognized as binding and reasonable.

2. Usual Authority of an Agent

The usual authority of an agent first came up for consideration in  the  case of WATTEAN V FENWICK (1893) IQ.B.346. In that  case  F owned a hotel where he appointed a manager. It was expressly forbidden from buying goods other than mineral water and bottle of beer. It had previously owned the hotel and his name remained above the door as the licenses it ordered cigars from W, who believed he was the owner of the hotel. F was had liable for the price of the cigars.

It might be argued that W did not think H was an agent, he believed H to be the principal, so if W had not been allowed to enforce the contract against F, W would have lost nothing because he was unaware of F’s existence . against this it might be said that F’s action in allowing his agent, H, to represent himself as the principal placed W in a weakened position W had every reason to suppose that H was the original principal and this misconception was facilitated by F.

The case does not fall within the normal understanding of the doctrine of apparent authority because F made no representation to W that it was acting as F’s agent.

Also, the decision does not appear to be the same with those case where someone is appointed to a particular position and the principal is bound by actions that fall within the usual authority of an agent in that position.

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