Agency and Partnership Law

• Date: 01 December 2010
• Published date: 01 December 2010
• Citation: (2010) 11 SAL Ann Rev 67
• Author: Pearlie KOH LLB (Hons) (National University of Singapore), LLM (University of Melbourne); Advocate and Solicitor (Singapore); Associate Professor, School of Law, Singapore Management University. Stephen BULL BA, LLB (Hons) (Wellington), LLM (Harvard); Solicitor (England and Wales), Barrister and Solicitor (New Zealand), Member of the New York Bar; Practice Associate Professor, School of Law, Singapore Management University.

Apparent authority

The elements

3.1 The elements that must be present before apparent or ostensible authority is made out are not controversial. As the concept is premised on estoppel, the principal“s representation, that created the appearance of authority of an agent, made to the other contracting party, lies at the core of the doctrine. Where the representation does not emanate from the principal himself, as would necessarily be the case where corporations are concerned, it is of central importance to show that the representation was made by a person with the actual authority to make such representations. Such persons would include one who has the actual authority to manage the business of the principal either generally or in respect of the matters to which the impugned contract relates: see Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480. It is clear therefore that a representation as to his own actual authority made by the unauthorised agent himself will not suffice.

3.2 These points were reiterated by the High Court in Equatorial Marine Fuel Management Services Pte Ltd v The Bunga Melati 5 [2010] SGHC 193. The plaintiff claimed against the defendant for sums allegedly owing under certain contracts for the supply of bunkers to the defendant“s vessels. The plaintiff “s case was that these contracts were made on the defendant“s behalf by its alleged agent, MAL. The defendant“s case, however, was that it had procured the sale and supply of bunkers to its vessels from MAL directly as the contractual seller. The plaintiff lacked the evidence to support a case of actual agency and sought to rely instead on, inter alia, the evidence of third parties, that the employees of the defendant had made representations to them that MAL was its agent, to establish a case of apparent authority.

3.3 The court held that the plaintiff “s evidence fell far short of that required for establishing an agency by estoppel. Not only was there no evidence that those employees were authorised to manage the business

of the defendant, the representations, if made at all, were not made to the plaintiff. The plaintiff “s case was therefore bound to fail.

The scope of apparent authority

3.4 Even where it is established that the principal has created, by a representation, an appearance of authority that was relied upon by the contracting party, the latter can only hold the principal to the contract if that contract falls within the scope of the apparent authority. The point is illustrated by the decision in United States Trading Co Pte Ltd v Philips Electronics Singapore Pte Ltd [2010] SGHC 194 (‘United States Trading’).

3.5 The plaintiff, United States Trading Co Pte Ltd (‘UST’), claimed against the defendant, Philips Electronics (‘Philips’), for a sum of money advanced to the latter purportedly under a contract of loan entered into on Philips“ behalf by its agent. UST was a commission agent representing Lucky Alloys (‘LA’), an aluminium smelter in Dubai. LA was one of Philips“ two main suppliers of aluminium. Jason Ting (‘Ting’) was an employee of Philips who was responsible for the purchase of aluminium. He would receive quotations from UST for supply of aluminium from LA, orally confirm orders with UST, and raise the necessary purchase orders to LA, which were signed by the general manager and chief financial officer of Philips. Ting has been performing this function for at least four years. In 2006, when the prices of aluminium were rising rapidly, Ting requested help from UST to partially finance the purchase of an...