Given the nature of companies, it is common for them to enter
into contracts with third parties by way of an agent. This article
explores some of the legal protections for third parties that enter
into a contract with a company through its agent and arguments
available to a company seeking to disclaim an agreement in those
circumstances. In particular, we examine the concept of ostensible
authority and how a company can be bound by the acts of its agent
when the scope of the agent's authority may be questioned.
Defining the company agency relationship
The case of International Harvester Co of Australia Pty Ltd
v Carrigan's Hazeldene Pastoral Co (1958) stated that the
agency relationship in the context of a company is a relationship
"involving authority or capacity in one person to create or
affect legal relations between another person or company and third
parties".
