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The authority of the agent 165

The manager had no express or implied actual authority to buy the cigars. (On the contrary,
he had been forbidden to do this.) Nor did the manager have apparent authority because
the third party had not relied on a representation that the agent was an agent with such
authority. (The third party did not believe the manager to be an agent.) The decision in this
case has been doubted in some other cases but it has never been overruled. It is applicable
only when:

(i) the third party did not think that the agent was an agent; and

(ii) the agent made a contract which his position as an agent would usually give him
authority to make, but which he had been forbidden by the principal to make.

Agency by operation of law

Agency of necessity

In commercial situations an agent will have authority imposed by the law, on the grounds
of necessity, if:

(i) there was a commercial emergency which made it necessary for the agent to act as he did;

(ii) it was impossible for the agent to obtain the principal’s instructions;

(iii) the agent acted in good faith and in the principal’s best interests;

(iv) the agent acted reasonably in the circumstances.

Such agency of necessity is usually found in maritime emergencies. Old cases gave the
captains of ships the power to sell cargoes which were perishing.
If there is an agency of necessity then the consequences are the same as if the agent had
had actual authority. The principal and third party will be bound by the agent’s actions, and
the agent will have no liability for acting as he did.
Occasionally, agencies of necessity can be found on dry land.

As modern communications have improved, agency of necessity is ever less likely
to arise.

Great Northern Railway Co vSwaffield (1874)

A horse arrived at a railway station but nobody picked it up. The railway company felt

obliged to feed the horse and put it into a stable. When the owner collected the horse he

refused to reimburse the railway company.

HeldThe owner had to pay for the feeding and the stabling as there was an agency of

necessity.

idea that the manager was an agent. He thought that the manager owned the pub because

the manager used to own the pub and his name was still above the door of the pub. The

seller sued the owner, claiming that the owner was liable on the contract.

HeldThe owner was liable on the contract.