1. Agency by Agreement.

2. Agency by Apparent or Ostensible Authority.

3. Agency by the Operation of The Law.

4. Agency by Ratification.

1. Gives agent actual authority.

In the case of Hely-Hutchinson v Brayhead Ltd, Lord Denning said:

…actual authority may be express or implied. It is express when it is given by express words, such as when a board of directors pass a resolution which authorises two of their number to sign cheques . It is implied when it is inferred from the conduct of the parties and the circumstances of the case , such as when the board of directors appoint one of their number to be managing director. They thereby impliedly authorise him to do all such things as fall within the usual scope of that office. Actual authority, express or implied, is binding as between the company and the agent, and also as between the company and others, whether they are within the company or outside it.

1. Incidental Authority. see the case of Agbemashior and Others v State Insurance Corporation and Others, where the agent could employ a lawyer to hep him recover claims.

In section 2.03 of the Restatement (3rd) of Agency, it is provided that “apparent authority is the power held by an agent or other actor to affect a principal’s legal relations with third parties

when a third party reasonably believes the actor has authority to act on behalf of the principal and that belief is traceable to the principal’s manifestations

.”

Per Lord Donaldson MR in the case of United Bank of Kuwait v. Hammond, “It is trite law that an agent cannot ordinarily confer ostensible authority on himself. He cannot pull himself up by his own shoelaces.” See also the case of Attorney General for Cylon v Silva

An agency relationship may be created when the law allows a person (an agent) to act on behalf of another (a principal) to save some proprietary interest of the principal in jeopardy. See the case of China Pacific S.A v Food Corporation of India

1. It must be impossible for the agent to communicate with the principal: in the case of

Springer v Great Western Railway Company

a , the defendant was contracted to carry tomatoes from Channels Island to Weymouth by ship and from there to London by train. When the ship arrived in Weymouth, and due to a strike action by the defendant’s workers, there was a two-day delay in Weymouth causing some tomatoes to start to go bad, the defendant, without communicating to the plaintiff, decided to sell those tomatoes they believed could go bad beyond saleable condition. The plaintiff brought an action against the defendant for damages when they discovered this, and the court held that the defendant’s failure to communicate with the plaintiff about their actions when they could have done so, makes them liable. No agency for necessity thus existed due to the possibility of communication and the failure of the defendant to communicate.

2. The action is necessary for the benefit of the principal: In the case of Prager v Blatspiel, Stamp and Heacock Ltd, the plaintiffs, from Romania, bought fur from the defendants, based in London, but decided to wait until the First World War was over before taking delivery. The occupation of Romania by Germany made communication impossible between the plaintiff and the defendant. While the fur was in storage with the defendant, it was increasing in value. Towards the end of the war, the defendants began selling off the fur at the local level on grounds of agency by necessity. The court held that no agency by necessity existed because there was no commercial necessity to sell the fur without informing the plaintiffs since the fur was increasing in value.

3. The agent must act bone fide in the interest of the principal. See the case of F v West Berkshire Health Authority.

4. The act of the agent must be reasonable and prudent. In the case of China Pacific S.A. v Food Corporation of India (Winson) mentioned above, the plaintiff’s act of storing the wheat was reasonable and prudent since wheat is highly perishable.

5. The principal must not have given express instructions to act otherwise. A principal may expressly inform a shipmaster to allow the cargo to perish when he, the principal, is unable to take delivery. The agent cannot claim to have acted under the agency of necessity by storing the cargo when the principal fails to take delivery.

In section 4.01(1) of the Restatement (3rd) of Agency, ratification is defined as “…the affirmance of a prior act done by another, whereby the act is given effect as if done by an agent acting with actual authority.”

In Wilson v Tunman, it is explained as: an act done, for another. By a person, not assuming to act for himself, but for such other person, though without any precedent authority whatever, becomes the act of the principal, if subsequently ratified by him, is the known and well-established rule of law… In that case the principal is bound by the act, whether it be for his detriment or his advantage, and whether it be founded on a tort or on contract, to the same effect as by, and with all the consequences which follow from, the same act done by his previous authority.

1. Retrospective Effect of Ratification: When the principal ratifies the acts of an agent done without actual authority, it is as though the agent had actual authority to bind and act on behalf of the principal at the time of the agent’s acts. See the case of Bolton Partners v Lambert

2. Existence of Principal at Time of Agent’s Acts: A principal who was non-existent at the time of the agent’s acts cannot ratify the agent’s acts when he comes into existence after the act. See the case of Kelner v Baxter (company promoters buying wine on behalf of a yet to be incorporated company)

3. The Act must have been done on behalf of the Principal. In other words an Undisclosed Principal Cannot Ratify: A principal cannot ratify the acts of an agent done in the name of the agent. Ratification is only possible if the agent’s acts were done in the name of or on behalf of the principal. See the case of Keighley, Maxsted & Co v Durant (one Mr Robert authorized to purchase wheat, he did so in his own name... principal could not ratify)

4. Void acts cannot be Ratified: If the acts of the agent are void ab initio, the principal cannot subsequently ratify those acts. See the case of Brook v Hook.

5. Ratification must be done within a Reasonable Period

1. Retrospective Effect of Ratification: When the principal ratifies the acts of an agent done without actual authority, it is as though the agent had actual authority to bind and act on behalf of the principal at the time of the agent’s acts. See the case of Bolton Partners v Lambert