What is agency and what are the different kinds of authority?

Question

What is agency and what are the different types of authority?

Answer

Agency is where one person, the principal, appoints another, the agent, to control their legal relations with third parties (Goode, 2010). In order for an agent to have such powers, the principal must give authorisation to the agent. Authorisation can manifest itself in various ways (Baskind, 2016).

The first category of authority is actual authority, which is divided into express and implied. Express actual authority confers authority through an official document or words. Implied actual authority is authority the law deems to be appropriate based on the circumstances or the parties’ relationship; for example, an estate agent would be considered to have authority to negotiate for their principal on the purchase of a house (Baskind, 2016).

The second category of authority is apparent authority, whereby the principal makes a representation to a third party, who relies on this representation, and in doing so has altered their position, by for example, assuming obligations under the contract (Freeman & Lockyer v Buckhurst).

The final category of authority is usual authority, which is authority to do that which is normally confided to an agent of that character. This authority lacks express agreement or a representation, and therefore falls under a separate category (Watteau).

References

Goode, R and McKendrick, E., (2010) Goode on Commercial Law, Fourth edition, Penguin

Baskind, E., Osbourne, G., and Roach, L., (2016) Commercial Law, Second edition, Oxford University Press

Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480

Watteau v Fenwick [1893] 1 QB 346