In the March edition of CK Momentum, we looked at the
formalities of signing contracts. However, in some commercial
dealings following the formal rules of, for example, having two
directors sign a document or asking for a copy of a board
resolution to verify a representative is authorised to bind the
company, is not always practical or possible. Senior associate Brad
Vinning looks at the circumstances in which you may be able to
assume the person you are dealing has authority to bind the company
because of implied or apparent authority.
IMPLIED OR APPARENT AUTHORITY
An outsider may assume a person has implied or apparent
authority where there is the appearance of authority conferred on
that person. Where a person has such authority, as between the
company and the outsider, the company is prevented from denying
that the person lacked authority and a valid contract will
exist.
