Hely-Hutchinson v Brayhead Ltd [1968] 1 QB 549

• Richards, a director and chairman of defendant company, was accustomed to entering into various contracts on Defendant’s behalf and only informing other directors subsequently. Claimant was managing director of a company with whom Richards had contracted. When Claimant sued Defendant under contract, Defendant alleged Richards had no authority to enter contract in question on behalf of Defendant. Held:

Lord Denning MR

Implied Authority

• Authority is may be express or implied

• Authority is implied where it is inferred from conduct of parties and circumstances of case

  • e.g. X is managing director - X has implied authority to do anything

  • e.g. X is sales director - has implied authority to enter contracts of sale

Ostensible Authority

• Ostensible authority often coincides with actual authority

  • E.g. where X is appointed managing director, also has ostensible authority to do anything usually falling under powers of a managing director

  • Thus here, even if X is expressly restricted from entering contracts of more than £1,000, will have ostensible authority to enter contracts of greater value

Facts

• Richards had implied authority to enter into contract from circumstances of case

• Richards did not have implied authority from nature of office

  • I.e. is nothing special about position of chairman entitling him to enter any contract without board approval

• However did have implied authority from the acquiescence of board in his practice of entering contracts on behalf of company over period of many months