An issue was raised that contracts entered into by the defendant by an ‘Industry Manager’ and an ‘Inside Sales Manager’ were not so entered as the two individuals had no authority and because the contracts were for substantial quantities of the goods in question. Longmore LJ said: ‘Here all Mr Waksman could rely on was the fact that the contract for 8 metric tons per month for a year (96 tons in all) was considerably greater than any previous contract. This is undoubtedly true but no suggestion is or can be made that Pharmed knew that Mr Somerville did not have authority to make such an agreement. The most that can be said is that they ought to have suspected he might not have such authority. But why? Previous transactions, albeit for smaller amounts, had been performed. Mr Waksman says that if Pharmed had only insisted on a Purchase Contract form for the full amount, the lack of authority would have become apparent. But if, as the Deputy Judge held (and this is not now challenged), there was no positive requirement derived from previous transactions that the contract be on Univar’s Purchase Contract form, there was nothing to suggest to Mr Aurora that the transaction might not be authorised. If there were a plausible assertion that Mr Aurora did in fact suspect that the transaction was beyond Mr Somerville’s authority, there might then have to be a trial. But no ground exists to support the existence of any such suspicion on his part.
The question whether such suspicion ought to have existed is a matter that can be decided without the need for oral evidence since Mr Aurora (and still less Mr Somerville) could give no relevant admissible evidence on that question. That is for the court and the Deputy Judge correctly decided he could determine the matter on the material before him.
For my part I cannot see why any grounds for suspicion should have existed. Previous transactions had been honoured. No one in Univar had made any suggestion that Mr Somerville’s authority was, in any way, limited. There was no reason to think that Univar would not want to acquire or be unable to distribute 8 metric tons per month, if the price was right. No complaint was, in fact, made about the transaction until Univar realised the price had not risen as far as they had expected. The authorities cited by Mr Waksman were entirely different from the facts of the present case. In Houghton the fact that should have put the third party on inquiry was the fact that the money of one company was being used to pay the debts of another; in Underwood it was the fact that the agent was paying into his own account a cheque made out to his principal. These were, on any view, surprising facts which truly rendered the transactions suspicious. There is nothing remotely comparable in the present case.
In these circumstances, despite the caution which a court must exercise before giving summary judgment, it seems to me that the Deputy Judge was right to conclude that it was clear that Mr Somerville had ostensible authority to conclude the contract of 14th August and that Univar was bound by it.’
Judges:
Lord Justice Chadwick, Lord Justice Longmore
Citations:
[2002] EWCA Civ 1569, [2003] 1 All ER (Comm) 321
Links:
Jurisdiction:
England and Wales
Cited by:
Cited – CRJ Services Ltd v Lanstar Ltd (T/A CSG Lanstar) TCC 19-Apr-2011
The claimant hired out recycling plant and equipment and the defendant had been a customer. A local agent of the defendant had properly entered into certain contracts with the claimant acting as the company’s agent, but then created three long term . .
Lists of cited by and citing cases may be incomplete.
Contract, Agency
Updated: 23 November 2022; Ref: scu.178110