Question

 

1. How do apparent (ostensible) authority and actual authority differ? What effect does this have on a corporation’s liability?

See 7.18.  

 

In Freeman v Lockyer [1964] 2 QB 480 (upheld by the Australian High Court in Crabtree-Vickers Pty Ltd v Australian Direct Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72), the difference between actual and ostensible authority was discussed:

• Actual authority is a legal relationship between the principal and an agent, created by an agreement between themselves, of which the contractor may be ignorant, although contractual rights and liabilities will be created between the principal and the contractor.

• Apparent or ostensible authority is a legal relationship between the principal and the contractor created by a representation made by the principal to the contractor, which is intended to be and is in fact acted on by the contractor, that the agent has the authority to enter into contracts on behalf of the principal. This then will render the principal liable to perform the obligations arising under the contract.

 

The company is liable in case of actual authority. It may also be liable in case of ostensible authority when three elements discussed in Freeman v Lockyer [1964] 2 QB 480 are present.

Answer 1

An "actual" authority is a lawful connection among head and operator made by a consensual consent to which only they are parties. Its degree is to be discovered by applying standard standards of development of agreements, including any legitimate ramifications from the express words utilized, the utilizations of the exchange, or the course of business between the gatherings. To this understanding the temporary worker is a more interesting; he might be absolutely uninformed of the presence of any expert with respect to the specialist. By the by, if the specialist goes into an agreement according to the "actual" authority, it makes contractual rights and liabilities between the head and the temporary worker. It might be that this standard identifying with "undisclosed administrators," which is exceptional to English law, can be supported as keeping away from circuity of activity, for the chief could in value propel the specialist to loan his name in an activity to implement the agreement against the contractual worker, and would at custom-based law be subject to repay the operator in regard of the presentation of the commitments accepted by the specialist under the agreement.

An "apparent" or "ostensible" authority, then again, is a lawful connection between the head and the contractual worker made by a portrayal, made by the head to the contract based worker, proposed to be and in truth followed up on by the temporary worker, that the specialist has power to enter for the head into an agreement of a sort inside the extent of the "apparent" authority, to deliver the vital subject to play out any commitments forced upon him by such agreement. To the relationship so made the specialist is an outsider. He need not be (in spite of the fact that he for the most part knows) of the presence of the portrayal yet he should not indicate to settle on the arrangement as head himself. The portrayal, when followed up on by the contractual worker by going into an agreement with the specialist, works as an estoppel, keeping the head from stating that he isn't limited by the agreement. It is unessential whether the specialist had genuine power to go into the agreement.

The commonest type of portrayal by a chief making an "apparent" authority of an operator is by lead, specifically, by allowing the specialist to act in the administration or direct of the central's business.

So,The organization is at risk if there should arise an occurrence of actual power. It might likewise be obligated if there should be an occurrence of ostensible power when three components talked about.

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