Watteau v. Fenwick England 1892
Facts:
Humble had a business at a beer-house called the Victoria Hotel, which
he had transferred to defendants, a firm of brewers, some years before
the present action. After the transfer of the business, Humble remained
as defendants’ manager; but the license was always taken out in Humble’s
name. Under an agreement between Humble and defendants, Humble had no
authority to buy any goods for the business except bottled ales and
mineral waters; all other goods required were to be supplied by the
defendants themselves. The plaintiff gave credit to Humble only for
goods such as cigars, bovril(used for flavoring), and other articles.
Humble was given these goods from plaintiff for use in the Victoria
Hotel. This action was brought to recover the price of goods that
plaintiff gave to Humble for use in the Victoria Hotel, not knowing that
the Victoria Hotel was sold by Humble to defendants.
Issue:
Is Humble an agent of defendants thus making defendants liable for the
price of goods that plaintiff gave to their agent (Humble) for use at
their beer-house, the Victoria?
Holding: Once
it is established that the defendant was the real principal, the
ordinary doctrine as to principal and agent applies that the principal
is liable for all the acts of the agent which are within the authority
usually confided to an agent of that character, notwithstanding
limitations, as between the principal and the agent, put upon that
authority.
Reasoning:
Actual Authority?
-No actual authority. Humble has authority to buy ales and mineral waters, but not cigars.
-Apparent Authority?
-Apparent authority requires that there is some manifestation to the
principal; since the plaintiff did not know that there was a
principal there cannot be apparent authority.
-Inherent
-”Once it is established that the defendant was the real
principal...the ordinary doctrine is liable for all the acts
of the agent which are within the authority usually confided to an agent
of that character, notwithstanding limitations, as between the
principal and the agent, put upon the authority.”
-If the person interacting with you seems like they have authority and
it is reasonable to believe that they have authority, then
we don’t want the principal to rely on technical
arguments to elude liability.
-If this was the case, the economy could not function because third
parties could not trust whether or not the person
they are dealing with has the authority to act.
Liability of Undisclosed Principal - Restatement (Third) Agency s. 2.06
“An
undisclosed principal is subject to liability to a third party who is
justifiably induced to make a detrimental change in position by an agent
acting on the principal’s behalf and without actual authority if the
principal, having notice of the agent’s conduct and that it might induce
others to change their positions, did not take reasonable steps to
notify them of the facts.”
-”An
undisclosed principal may not rely on instructions given an agent that
qualify or reduce the agent’s authority to less than the authority a
third party would reasonably believe the agent to have under the same
circumstances if the principal had been disclosed.”
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