Agency Agreement Practical Law

15.4.2 Another way to create an agency report is if authority is implied. In the case of tacit authority, the contracting authority shall not explicitly tell the agent that the agent has been authorised to act in a certain way. Instead, the actions of the sponsor and the agent are such that it is clear that the sponsor has agreed that the agent has some authority, and the agent has agreed. In other words, such an agreement derives from the conduct of the party and the circumstances of the case. The most frequent cases of implied authority occur when a person is appointed to a position without explicit authority being conferred on him, and the position is one that normally involves some authority. For example, when a board of directors appoints one of its own as chief executive officer, the board of directors implicitly authorizes it to do all things that fall within the usual scope of that function – see Hely Hutchinson v Brayhead Ltd [1968] 1 QB 549 at p. 583. One would expect that most managers would generally be authorized, at least implicitly, to approve or enter into contracts in the course of the normal business activities. 15.4.1 The most obvious way to create an agency relationship is through explicit consent or authorization. An explicit power is conferred where the procuring entity expressly accepts, by terms, that the agent acts in a manner specific to the contracting entity and that the holder gives his consent. The principal and the agent are considered to agree when they have agreed on the amounts resulting from the law for such a relationship, even if they have not recognised it themselves and even if they have announced their refusal – see Garnac Co Grain Inc v Faure & Fairclough Ltd [1968] 1 AC 1130 at p.

1137. However, consent must have been given by each of them. First, we look at what they said and did at the time of the alleged creation of the Agency. Previous words and behaviors can give indications of the evolution of relationships existing at that time and can be considered more generally as a historical context. . . .