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Freeman & Lockyer v Buckhurst Properties Ltd

[1964] 2 QB 480

Case summary last updated at 22/01/2020 14:33 by the Oxbridge Notes in-house law team.

Judgement for the case Freeman & Lockyer v Buckhurst Properties Ltd

X and Y had formed defendant company, for purpose of selling some land. X, Y and a nominee of both were appointed directors; under articles, all 4 were needed to constitute a quorum. X spent most of his time abroad, whilst Y undertook day-to-day management of company. Y decided to develop the land, and engaged C, a firm of architects, to apply for planning permission. Company later refused to pay C on grounds that C had no authority to engage them. Held:
Diplock LJ
·       Is ostensible authority where:
1)     Representation was made to T that agent had authority to enter on behalf of the company into contract of the kind sought to be enforced
2)     Representation was made by a person who had actual authority to manage business of company, either generally or in respect of matter to which the contract relates
3)     T was induced by the representation to enter into the contract
-        i.e. T relied upon it
4)     there were no restrictions in articles of company depriving it of capacity to enter into such a contract
·     This usually done via conduct
Ø e.g. board of directors appointing Y to a position in which he is permitted to act in management or conduct of company’s business
Ø here, Y has ostensible authority to enter into contracts which someone in that position would usually be able to enter in course of his duties
·     Y had ostensible authority to employ C.
1.   Board acquiesced to Y acting as managing director in process of finding purchaser for land 
–     thus represented he had actual authority to enter into contracts of sort which he entered with C (condition 1)
2.   Articles of association gave board full powers of management (condition 2)
3.   C entered into contract on basis of representation (condition 3)
4.   Articles of association did not deprive company of capacity to delegate authority to C (condition 4)

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