Richards, a director and chairman of defendant company, was accustomed to entering into various contracts on D’s behalf and only informing other directors subsequently. C was managing director of a company with whom Richards had contracted. When C sued D under contract, D alleged Richards had no authority to enter contract in question on behalf of D. 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
Ø e.g. X is managing director
– X has implied authority to do anything
Ø e.g. X is sales director
– has implied authority to enter contracts of sale
Ostensible Authority
· Ostensible authority often coincides with actual authority
Ø E.g. where X is appointed managing director, also has ostensible authority to do anything usually falling under powers of a managing director
Ø 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
a. Richards did nothave 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 authorityfrom the acquiescence of board in his practice of entering contracts on behalf of company over period of many months
