The significance of general and special authority in the development of the !agent's !external !authority in !English !

law
Ian Brown

*J.B.L. 391! Introduction

The principles of the law of agency are versatile and capacious but, since the beginning of the twentieth century, the modern law has classified and divided the notion of authority in agency in a clinically precise fashion. As between principal and agent, the agent is said to possess an actual, express authority which is the nucleus of his mandate. This may be extended by means of an actual, implied authority, but this categorisation acknowledges that the agent's actual, express authority is unlikely to be exact and all-encompassing and so it is simply an addendum to the actual, express authority. Actual, implied authority can thus only amplify the agent's express mandate1 and it could not, of course, extend to an act of the agent which is prohibited by the terms of the express authority. In the bulk of cases, the actual authority at the root of the internal principal-agent relationship is clearly discernible and somewhat mundane. Where an agent has terse, express authority to sell a car on behalf of his principal he will, necessarily, have an actual, implied authority to demonstrate its controls,2 although ascertaining the scope of the actual, implied authority possessed by the chairman of a limited company, whilst equally prosaic may be more difficult to discern with precision.3 In those cases where the agent exceeds his actual authority, the principal may, within severe limits, ratify his agent's acts and so ratification is also regarded as a species of actual authority conferred ex post facto but it is, notoriously, equivalent to an antecedent authority.4 These categories of actual authority do nothing more than define the nature and scope of the internal *J.B.L. 392 authority that exists between principal and agent in a consensual, agency relationship.5 When the external relationship of principal and third party is evaluated, modern English law again employs a methodical organisation in recognising that an agent may possess the antithesis of actual authority in the guise of apparent authority. Consequently, where the agent has exceeded his actual authority and the principal has not ratified his agent's transgression, the third party may be able to establish an apparent authority in the agent. The principal is thus prevented from denying the appearance of authority that he has created and so this division of authority is, today, premised upon estoppel. The law's attitude is that a principal might be estopped by virtue of his representations, express or implied, which are made to the third party and relied upon by him. The contemporary common law looks, first and foremost, to this representation and asks whether it is unequivocally consistent with the

creation of authority in the agent. Consequently, unlike the civil law, there is no insistence on the dominance of the third party's protection by reason of his being the bona fide outsider acting in reliance upon the apparent authority which the principal has initiated. The English perspective has undoubtedly led to the constriction of the principal's liability for the apparent authority of his agent,6 not least because the representation made to the third party may be regarded as equivocal and ambiguous in nature7 or the acts of a fraudulent agent may be regarded as the proximate cause of the loss incurred by the third party,8 thereby severing the chain of causation leading to the principal and effectively isolating him from liability. Apart from authority emanating from necessity, which is notoriously difficult to classify,9 English law acknowledges only the two-fold categorisation of actual and apparent authority which must, therefore, encompass all the factual situations that arise within agency. This classification can, effortlessly, be exposed as flawed in theory and deficient in practice. As apparent authority is premised upon a voluntary representation made by the principal to the third party that the agent possesses authority, awkward fictionalising is required to render the principal liable where his agent has performed an act that has been prohibited expressly by the terms of the actual authority yet is patently within the scope of the agent's apparent authority. In this situation, English law's insistence that apparent *J.B.L. 393 authority emanates from the principal means that the depths of objectivity must be plumbed in order to sustain an appearance of authority in the agent. Moreover, it takes only the facts of Watteau v Fenwick 10 to reveal the practical shortcomings of the modern categories of authority. In that renowned decision, Humble, the owner of a beerhouse (The Victoria Hotel, Stockton-on-Tees), transferred it to the defendant firm of brewers some years before the plaintiff instituted proceedings. After the transfer, Humble remained as the defendant's manager and, most significantly, the licence was in Humble's name and his was the name painted over the door. It was agreed between Humble and the defendant brewery that the former should have no authority to buy any goods for the business except bottled ales and mineral waters, all other goods being supplied by the brewery. Humble nevertheless ordered cigars and Bovril for the business from the plaintiff, a travelling salesman. Upon discovering the defendant's existence, the plaintiff sued him to recover the price of the goods delivered. It was argued that, as Humble possessed no actual authority of any sort, the defendant could be liable only on the basis of apparent authority, but that an appearance of authority could not possibly be substantiated as the defendant was undisclosed and so was unable to represent that Humble was his agent. Despite this argument, judgment was given unequivocally for the plaintiff. Wills J. was resolute in deciding that:

The principal is liable for all the acts of the agent which are within the authority usually confided to an agent of that character, notwithstanding limitations, as between the principal and the agent, put upon that authority. It is said that it is only so where there has been a holding out of authority But I do not think so.11 Ostensibly, the travelling salesman extended credit to Humble personally and it is of course arguable that he considered him to be the owner of The Victoria Hotel but this is, surely, a facile conclusion which does nothing to explain and rationalise the judgment of Wills J. It is a more plausible inference that, in the context of a beerhouse and a brewery, the salesman assumed that he was dealing with an agent for a principal and, on the facts, he had probably surmised that this was a brewery, even though he had never heard of the defendants.12 As the salesman was not supplying beer or other goods which were the stock-in-trade of a brewery, he presumably thought there was no reason to question Humble's authority to purchase the cigars and Bovril which were goods normally supplied to a beerhouse13 and had been thus supplied over some years.14 The reasonableness of this presumption could only be bolstered by the failure of the agent to *J.B.L. 394 refuse the goods that were proffered. Current orthodoxy insists that actual and apparent authority are the only categories of authority that an agent can possess and so it is commonly asserted that Humble possessed no recognisable form of authority to contract on behalf of his principal. But this assertion is just as unhelpful as the argument that credit was extended to Humble personally and, as Wills J. acknowledged the two-fold classification of actual and apparent authority, such a negative contention neither elucidates nor justifies the reasoning in Watteau. Today, however, it is plain that the third party's reasonable perception that the brewery was the principal is rejected as inconsequential. Moreover, his ultimate assertion that, as a relationship of principal and agent existed in fact, liability should attach to the principal, is considered to be incomprehensible. If all notions of antecedent authority are denied to the third party in Watteau, it might be thought that the principal in such a case should be liable to pay for the goods supplied and used by him on the basis of his having adopted the contract and its correlative benefits. However, since the peremptory and short-sighted decision of the House of Lords in Keighley Maxsted & Co v Durant, 15 it is indisputable that an undisclosed principal cannot ratify his agent's unauthorised contracts,16 meaning that, as apparent authority is inapplicable to the undisclosed principal, the agent for such a principal must act within the bounds of his actual authority. Indeed, it appears from Keighley that an agent for an undisclosed principal must act within his actual, express authority as, by any standards, the agent in Keighley must have been within the scope of his actual, implied authority in exercising a discretion and exceeding the

principal's stipulated price by 3d.17 In the Watteau situation, it is thus impossible for the third party to assert that the principal has ratified his agent's contract by keeping, using or selling the goods *J.B.L. 395 that have been supplied and it is equally significant that the principal cannot maintain an action against the third party for non-delivery of the goods. The agent's external authority has thus been curtailed and confined by the modern law, thereby restricting the utility of agency for the principal and frequently denying a remedy to the bona fide third party. It is, perhaps, not an overstatement that whilst the current categories of authority in agency possess an elementary, mechanistic symmetry, their configuration is divorced from commercial reality.

The dominance of the bona fide third party

It is, of course, not uncommon in agency for the law to insist that the bona fide third party's position must be protected above all else. Many of the civil law systems, and Germany in particular, were influenced by the writings of Rudolf von Ihering18 and Paul Laband19 in the middle of the nineteenth century and make a clear distinction between the internal relationship of principal and agent and the external nexus between the agent and the third party, emphasising that there is no necessary coincidence between these internal and external aspects20 and that the smooth operation of commerce demands that there be agents with commodious, and virtually unimpeachable, external authority. Laband considered that even the third party's knowledge of the principal's restrictions on his agent's authority would not limit the agent's authority vis--vis the third party. An exception to the agent's all-embracing authority would be admitted only where there was collusion between the agent and the third party to cause loss to the principal. In the United States, the third party's position has been fortified by the notion of inherent agency power which is defined in the Restatement, Second, Agency 8A as a term used to indicate the power of an agent which is derived not from authority, apparent authority or estoppel, but solely from the agency relation and exists for the protection of persons harmed by or dealing with a servant or other agent.21 In English law, it is well-known that some early decisions in agency championed the bona fide third party's position at the expense of the principal.22 *J.B.L. 396 Stoljar's23 readable overview of the law drew attention to many such cases which emphasised that, as a question of allocation of risk between principal and third party, the former was deemed to accept the hazards entailed in utilising an agent. Stoljar's work was significant in tracing many of the historical developments of agency law, but, with respect, the author's appraisal consisted of separate historical vignettes which were not assembled to form a coherent picture,24 and his conclusions sometimes lacked rigour.25

Apparent authority and general authority

This article seeks to establish the vinculum in the formative principles of agency law regarding the agent's external authority The notion of authority in agency was originally a much broader and more pliable concept than it is today and the distinction between general and special agents, considered below, was both powerful and pervasive during the development of the agent's external authority. It is often assumed that apparent authority lay at the root of the agent's external authority and, indeed, it has been asserted that the distinction between general and special agents was principally significant in the early development of the doctrine of apparent authority.26 Whilst general authority coalesces with apparent authority in some of the later nineteenth century cases, close scrutiny of the decisions reveals that the idea of general authority was entirely separate and distinct from apparent authority and agency by estoppel. The inductive cases on general authority pre-date those on apparent authority and, even after the latter notion had emerged explicitly in the common law, the decisions on general authority persisted as a parallel development in the law of agency during the nineteenth century. It was only in the second half of the nineteenth century that estoppel reasoning became prominent and it is submitted that notions of estoppel were spawned, at least in part, as a rejoinder to what had come to be regarded as amorphous, liberal doctrine, in the form of general authority. Although Watteau v Fenwick is irreconcilable with modern agency theory,27 it is suggested that the decision embodied several broad legal postulates and assumptions regarding the agent's external, general authority which were prevalent in the eighteenth century and throughout much of the nineteenth century. Moreover, it is submitted that the decision in Watteau v Fenwick was premised upon the agent's having a species of *J.B.L. 397 actual, general authority, rather than his possessing any type of apparent authority or being classed as an apparent owner of the beerhouse.

The meaning of general and special authority

In the quest to explain and rationalise the agent's external authority, the pivotal distinction between general and special authority assumed great significance. In Fenn v Harrison, 28 Ashhurst J. explained this classification succinctly with a celebrated example that resonates throughout many of the other decisions at the time: If a person keeping livery stables, and having a horse to sell, directed his servant not to warrant him, and the servant did nevertheless warrant him, still the master would be liable on the warranty, because the servant was acting within the general scope of his authority, and the public cannot be supposed to be cognizant of any private conversation between the master and servant: but if the owner of a horse were to send a stranger to a fair with express directions not to warrant the horse, and the latter acted contrary to the orders, the purchaser could

only have recourse to the person who actually sold the horse, and the owner would not be liable on the warranty, because the servant was not acting within the scope of his employment. In one of the earliest and most influential English treatises on the law of agency published in 1833, Paley29 emphasised that a general agent was empowered to bind his employer by all acts within the scope of his employment, and that power cannot be limited by any private order or direction not known to the party dealing with the agent.30 On the other hand, a special agent was one who is employed about one specific act, or certain specific acts only, [and] does not bind his employer, unless his authority be strictly pursued: for it is the business of the party dealing with him to examine his authority.31 Paley32 went on to illustrate the division between general and special agents using Ashhurst J.'s example from Fenn v Harrison, quoted above. These types of agency were so entrenched that, well into the twentieth century, standard texts continued to refer, albeit tersely, to the distinction between general and special agents.33 Although the modern texts *J.B.L. 398 consider that this distinction has little, if any significance, in contemporary law34 the foundations of general and special authority have never been uncovered35 and the seminal contribution made by these notions has never been deciphered.

The basis and nature of general and special authority

The earliest decisions concerned with general and special authority are, not surprisingly, preoccupied with interpreting the terms of the actual authority that the agent possessed and, for example, whether or not the agent or servant in question might have sufficient latitude in his authority to exceed a price stipulated by the principal or to give a warranty as to the quality of the goods sold.36 If the agent was allowed such liberty, he would often be classified as a general agent. In Hicks v Hankin 37 the principal was a corn dealer who objected that the agent (his son) was a special agent who had exceeded his authority and bought malt from the plaintiff at a price higher than that stipulated by the principal. It was held that the agent had a discretion to exceed the prices fixed by his father and thus he did not fall into the category of a special agent. The principal was therefore bound by his agent's purchase from the malt factor. Hicks v Hankin and the other cases cited above are concerned exclusively with the internal principal-agent relationship. The analysis in these decisions relates to the width of the actual authority conferred by the principal but, as a corollary of this analysis, there is a consideration as to whether or not the agent was acting within the normal and usual parameters of an agent in his position. In Rimell v Sampayo, 38 for example, the issue was whether a principal was liable for his coachman's hire of horses from the plaintiff. The principal contended that he paid the coachman 220 per year to provide horses, his own livery, and

everything else that was needed for the carriage, and that the coachman thus hired the horses on *J.B.L. 399 his own account. Although the jury found for the defendant on a different point, the court was emphatic that the principal should be liable in this situation because a master may be prevented by business, or want of time, from making a bargain himself, and may send his servant: and provided the business be within the regular department of the servant, the master is clearly liable.39 Although in the earliest decisions there was no real awareness of the need for the agent to possess an external authority vis--vis the third party, there was a growing realisation in some of the cases that a wide, general authority conferred by the principal should be incapable of exclusion or diminution by a private limitation between principal and agent and so, to this extent, the cases on general authority took the first, faltering steps towards fixing the boundaries of the agent's external authority. In the very early decision in Nickson v Brohan, 40 for example, Parker C.J. was emphatic that a servant, by transacting affairs for his master, does thereby derive a general authority and credit from him; and if this general authority should be liable to be determined for a time, by any particular instructions or orders, to which none but the master and servant are privy, there would be an end of all dealing but with the master. Similarly, in Precious v Abel 41 the plaintiff was a farrier who sued for the cost of work done in shoeing and physicing the defendant's horse at the request of the defendant's groom. The defence was that the defendant had an agreement with his groom under which he allowed him five guineas a year to keep the horses properly shod and provided with medicines. Lord Kenyon held that this was no defence to the action unless the plaintiff knew of the agreement and trusted the groom because if the servant buys things which come to his master's use, the master should take care to see them paid for; for a tradesman has nothing to do with any private agreement between the master and servant.42 In addition to an evaluation of the agent's function and role, the earliest decisions on general authority considered the status, position or occupation of the principal to be crucial and so, whilst an agent acting for the owner of livery stables in the sale of a horse would definitely have a general authority, an agent acting for a private individual in such a sale was classed as a special agent with a limited authority. The issue of the principal's status was discussed exhaustively in Brady v Todd. 43 There the principal was a potato salesman in London but he also had a farm in Essex under the care of a farm bailiff. The principal purchased a horse which he sent to the farm for the bailiff's use. The plaintiff, an attorney, asked the bailiff whether the horse was quiet to drive and he received an absolute assurance that the animal was as quiet as can be. The plaintiff bought the horse which turned out to be extremely vicious but it was held that the principal was not liable as he did not carry on any trade of

dealing in horses and if we laid down for the first time that the servant of a private owner entrusted to sell and deliver *J.B.L. 400 a horse on one particular occasion is therefore by law authorised to bind his master by a warranty, we should establish a precedent of dangerous consequence.44 It is undeniable that, as discussed below, the law favoured the third party and imposed a duty on the owner of a business to control his agents in a responsible manner, but this emphatic public policy does not help in delineating the juristic nature and form of general and special authority Most importantly, the decisions on general authority were not based upon apparent authority in the form of a holding-out by the principal to the third party. General authority was regarded as a real authority conferred by the principal upon his agent. It did not arise, per se, from a repetition of acts or a continuity of service in which the principal acquiesced and which was visible to the third party. Indeed, the categories of general and special agent were inert and immovable and so, indisputably, no multiplication of acts by a special agent would convert him into a general agent.45 In Whitehead v Tuckett, 46 discussed below, Lord Ellenborough C.J. defined a general authority as one which is derived from a multitude of instances47 but, should a modern observer hurriedly classify this as apparent authority, he would be in error. The multitude of instances were those that occurred between the principal and agent inter se, thereby endowing the agent with expansive authority. Whilst much, although not necessarily all,48 of the commodious authority thus created would be visible to the third party it did not, unlike apparent authority, have to be directed at him: the primary imperative was that the principal was accountable for the authority created, a fact that is accentuated by the courts' indifference as to whether the principal was disclosed or undisclosed (see later). It is striking that in Brady Todd, 49 discussed above, Erle C.J. referred to apparent authority/holding-out as a separate notion from general and special authority. Indeed, the judge was emphatic that the facts did not indicate that the defendant had held out his agent as having authority nor could the circumstances bring the case within the notion of apparent ownership. Consequently, although Brady v Todd was heard in 1861 when the notion of apparent authority had become established, the decision of the court was based squarely on differentiating general from special authority with a finding that the agent, as the servant of a private owner, was patently not a general agent. Erle C.J. considered that there were cases where an agent has by law a general authority to bind his *J.B.L. 401 principal50 and, after citing three leading cases on general authority,51 he said that we understand those judges to refer to a general agent employed for a principal to carry on his business, that is, the business of horse-dealing; in which case there would be by law the authority here contended for. But the facts of the present case do not

bring the defendant within this rule, as he was not shewn to carry on any trade of dealing in horses. The upshot of this is that general authority was a type of actual authority. It is also abundantly clear that the agent's general authority emanated from, and attached to, the status and occupation of the principal. Both of these foundations--the agent's actual authority and the principal's status--are clearly discernible in Howard v Sheward. 52 There, both the defendant and his agent were horse-dealers. Although the defendant had expressly instructed the agent not to give a warranty, the agent warranted that a horse was sound but it turned out to be deficient. It was held that the plaintiff could recover damages against the defendant. Following the decision in Brady v Todd, above, Willes J. pointed out that the agent had assisted the defendant before in selling horses and so this sale was not an isolated instance, though if it had been, I do not conceive how it would have made any difference .53 Byles J. added that where the servant of a horse-dealer, or even one who only occasionally assists him in his business, being employed to sell, gives a warranty, the principal is bound, even though the agent or servant was expressly forbidden to warrant.54 Both judges thus considered that the agent's general authority derived from the principal's status as a horse dealer and, equally significant, the number of sales made by the agent was regarded as immaterial. If this decision had been premised on apparent authority, an isolated sale by the agent in contravention of his actual authority would, far from being immaterial, have been an essential consideration to weigh in the balance in deciding whether the agent might possess apparent authority. Moreover, if general authority were based upon holding-out, there would be no sustainable difference between owners of livery stables and private individuals who instructed their agents to sell horses: both types of principal are capable of representing that their agents have authority and, in entrusting their agents with horses to sell, both types of principal perform identical acts of holding-out. It follows that the ubiquitous depiction of the sale of a horse by a livery stable owner in contrast with such a sale by a private owner is concerned solely with the occupation or trade of the principal and the agent's general or special authority engendered as a concomitant of this distinction. Consequently, in complete contrast to the variable dynamic of apparent authority, general authority was static and status-based.

*J.B.L. 402! The effect of increased commerce on the notion of general and special authority

The cases concerned with horses, grooms and livery stables are emblematic of localised bargains in a predominantly agricultural economy. At the start of the eighteenth century, commerce started to increase in pace and volume and, almost inevitably, it became more complex. There were countless middlemen55 in business with differing

roles and functions and these intermediaries might change their capacity or have a dual capacity as an agent and an independent entrepreneur. The myriad of dealers in the labyrinthine, distributive commercial chain, has been described by Ashton56 : Traders moved about the country, buying produce here and disposing of it there as opportunities arose. They had various designations and duties. Dealers or factors took grain from the farmers and sold it to millers; these handed it on, in altered shape, to mealmen who supplied the bakers with the mixture they required. Graziers, whose business was to fatten cattle, brought from breeders, employed drovers, and transferred the beasts to market salesmen; and these supplied carcasses to wholesale butchers who, in turn, met the needs of the retail cuttingbutchers. Coal from the north was dealt with successively by Tyneside fitters, shipmasters, London crimps, wholesale dealers, and retailers or hawkers. Wool was passed on from the flockmasters to wool-staplers who sorted the fibres and provided the clothiers with a wide range of choice. After the wool had been spun it might be dealt in by yarn merchants and, after weaving and other processes, passed to drapers and shopkeepers. But the links in each of these chains varied from time to time: distribution never followed a set pattern The distinction between dealer and factor was blurred: at one time a man might buy grain or cattle outright; at another he might act as an agent (whether for the farmer or the wholesaler) and receive a commission. A grazier might either buy in the market or intercept the drover and strike his bargain on the road. A miller might turn jobber or mealman and draw as much of his income from a difference in prices as from his own authorised calling. The proliferation of specialised agents and middlemen meant that the role of the principal ceased to be as significant as it had been and the third party had, necessarily, to place greater reliance on the position of the agent and whether or not he acted according to the routine practices of an agent of his type. The law thus had to contend with the practices of the specialised categories of agent which began to emerge, such as factors and brokers.57 The increasing emphasis on the agent's role was expedited in that, from the end of the seventeenth century, there was a rapid movement towards retail sellers having fixed shop premises in contrast to the earlier, peripatetic trading, which *J.B.L. 403 took place at the large fairs and markets or from makeshift stalls in the street.58 In London, after the Great Fire of 1666, new streets developed into established shopping districts.59 Businesses, too, had permanent premises and a consequence of this permanency was that the third party would naturally rely upon, and have confidence in, the agent who managed the shop or business in question or the broker who bought and sold commodities on behalf of his principal. At the start of the nineteenth century, it had

become clear that the speed and impersonal nature of commerce meant that the third party had neither the time nor the ability to ascertain the scope of the agent's authority before contracting. Nevertheless, the argument was sometimes advanced that the third party should investigate the scope of the agent's authority before contracting. This reasoning began to look anachronistic where a general agent entered into a standard, commercial contract, and it was banished decisively in Smith v M'Guire. 60 There, a general agent in charge of a business that involved the regular shipment of cereal crops and the chartering of vessels, signed a charter-party on behalf of his principal per procuration. A prominent feature in both the argument and the judgments is whether this form of signature alerted the third party to the agent's limited authority thus meaning that the requisite inquiry should have been made. Pollock C.B. would not countenance such an argument and he carefully yet forcefully pointed out that cases where an agent had a special authority under a power of attorney61 or where a trustee conveyed an estate, had no connection whatever with the authority which a tradesman gives to his shopman to sell goods during his absence.62 The Chief Baron emphasised that: If a person professes to convey an estate as trustee, the party taking the conveyance from him is bound to ascertain that he had authority, as trustee, to convey it; but the same principle does not apply to commercial dealings. It would be most inconvenient if a person could not go into a shop and purchase an article without first asking the shopman whether he has authority to sell it. It may be that he was merely employed to sweep the shop; but it would be absurd to apply to the general business of life the doctrine as to the necessity of ascertaining whether an agent is acting within the scope of his authority--indeed the business of London could not go on.63 Although it was plain that the principal would invariably have no status beyond that of a buyer or seller and that the third party could look only to the objective role of the agent, how could the principal's liability be justified where, unknown to the third party, the agent had acted in contravention of his express authority? The answer to this question lay in avowing that, having initiated the agency in the first place, the principal was responsible for the transgressions of his general agent. In many of the earlier decisions, the very fact that an agency existed as a business *J.B.L. 404 mechanism justified the imposition of liability on the principal for acts that were within the scope of the agent's general authority and no secret limitation of such authority between principal and agent could be allowed to prevail for it would be a fraud on the public to hold otherwise.64 Indeed, as Atiyah65 has pointed out, there was a somewhat vague notion that a man who received some benefit from an enterprise ought to bear his share of any losses arising from it, this view emanating from the late eighteenth century decisions where

the liability of secret partners came under scrutiny.66 In fact, this important theme permeated the early notions of business liability. The cases discussed below illustrate that the courts had a deep distrust of the undisclosed principal who ran his business from behind a faade, culminating in the view that, unless he was made liable for his agent's acts, very mischievous consequences would often result.67 It should be stressed, once more, that there is no evidence of estoppel reasoning in the decisions on general authority in the late eighteenth and early nineteenth centuries. This fact is reinforced by some cases that had no hesitation in imposing liability on undisclosed principals who, being hidden from the third party, could not hold out their agents as having authority nor, for that matter, could such undisclosed principals make any representations relating to agency. At the start of the nineteenth century, two decisions concerned with undisclosed principals epitomised the problems inherent in an increasingly impersonal pattern of commerce and were seminal in the development of the agent's objective external authority. In Pickering v Busk 68 the principal was the purchaser of hemp that was lying at certain wharfs in London. He had the hemp transferred in the wharfinger's books into the name of the broker who effected the purchase for him and whose ordinary business was to buy and sell hemp. Without any actual authority and acting in his own name, the broker sold the hemp to the bona fide defendant who, shortly afterwards, became bankrupt. The principal demanded the hemp from the defendant's assignees in bankruptcy. It was held that the principal's transfer of the goods into the broker's name authorised him to deal with them and judgment was given for the defendant. This decision is often regarded as the original foundation of apparent authority in agency69 and whilst *J.B.L. 405 it is true that the term apparent authority was inaugurated by Lord Ellenborough C.J. in Pickering v Busk, he employed that phrase once only. Although the terminology used in the early cases cannot be conclusive, implied authority and general authority feature prominently throughout the judgments.70 Indeed, Lord Ellenborough C.J. asserted, somewhat enigmatically, that the apparent authority is the real authority.71 It is indisputable, however, that Bayley J.'s analysis was framed in terms of the agent's having an actual authority from the principal in that if a person puts goods into the custody of another, whose common business it is to sell, without limiting his authority, he thereby confers an implied authority upon him to sell them .72 Conferment of authority upon an agent is, by any standards, the antithesis of apparent authority as the latter type of authority is premised upon a representation of the principal which is made to the third party. In fact, the pith of Lord Ellenborough C.J.'s reasoning was that, as the broker was exhibited to the world as the owner73 of the goods, his unfettered authority to sell74 them could not be more potent and, likewise, the defendant's claim to acquire title to the goods was

unassailable. Consequently, it is impossible to assert that the decision does anything more than stress the necessity for a public, external authority in the agent, because there would he no safety in mercantile transactions75 if paramouncy were not accorded to this objective perspective. Less than three months after Pickering v Busk, the same judges heard the case of Whitehead v Tuckett. 76 In Whitehead, brokers in Liverpool, Sill and Co, bought and sold great quantities of sugars on behalf of the defendants who were wholesale grocers in Bristol. When the market was low, the brokers had an unlimited authority regarding quantity and price but, at other times, the principal imposed a check on prices. The brokers' authority was contained in numerous letters from the principal in which the sugar market and its prices were discussed in some detail but, overall, the principal's instructions were ambivalent. The dispute concerned 50 hogsheads of sugar sold by the brokers to the plaintiff below the minimum price stipulated by the principal in the correspondence. In this sale, the brokers acted in their own name and made no mention of their principal. Some sugar had been delivered to the plaintiff but the remainder was at the brokers' warehouse at the time of their bankruptcy. The principal had not been paid by the brokers and so he refused to deliver the remaining sugar to the plaintiff on the basis that the brokers had only a special, not a general authority and, as such, they had exceeded their authority as specified in the letters. It was *J.B.L. 406 held that the brokers' sale was valid as they had a general authority and the principal's letters gave them a wide discretion in exercising it. A verdict was thus found for the plaintiff There are several reasons to characterise Whitehead v Tuckett as a seminal decision in the development of the agent's general, external authority. First, all four judgments are based on general authority and no mention is made of apparent authority and holding-out. Once again, as the principal was undisclosed, an appearance of agency could not possibly be substantiated. Lord Ellenborough C.J. defined a general authority as one which is derived from a multitude of instances, and so it followed that Sill and Co. were general agents for they bought and sold in a multitude of instances in their own names, paid and received the money in their own names, and blended their accounts of receipts and payments, without carrying each order to a separate account with the defendant.77 Again, the emphasis in Whitehead is that the authority is conferred upon the agent by permitting him to act in this multitude of instances--the authority was thus established between principal and agent by permitting the agent such a latitude and so the defendant was bound by the general authority thus given to Sill and Co.78 Whitehead v Tuckett is not a decision based on apparent authority. Secondly, the defendant's argument was that brokers did not possess a general authority but, instead, had only a special authority in respect of

each parcel of goods entrusted to him for sale.79 The court rejected this contention and would not countenance an evaluation of the authority possessed by differing types of commercial agent. Instead, as Bayley J. emphasised, Sill and Co were common brokers for the sale of sugars and if the defendant suffered them to buy and sell for him in their own names he must he taken to have given them a general authority.80 In this respect, the decision in Whitehead v Tuckett was more progressive than that in Pickering v Busk. In the latter case, Lord Ellenborough C.J. was apprehensive regarding different categories of agent and whether their proper business81 was simply that of custodiers or bailees rather than sellers of goods. Moreover, because of the decision in Paterson v Tash 82 which had held that a factor entrusted with goods by his principal had no authority to pledge them, Lord Ellenborough had been considerably distressed83 as to the nature of the transaction entered into by the agent with the third party. There was no such dithering in Whitehead. There the only conclusion to be drawn from the facts84 was that Sill and Co had a general authority because if a secret limitation of *J.B.L. 407 authority between principal and agent were to prevail, in what a perilous predicament would the world stand in respect of their dealings85 with agents. Finally, as counsel for the defendant asserted, it was tolerably clear that Sill and Co were expressly prohibited from selling the sugar at the price obtained. Certainly the defendant's two letters immediately preceding the sale stated that sugars we are not inclined to sell at present, from an undoubted opinion that they will soon rally again and the last letter imposed an unequivocal price limit on any prospective sale. If there was such a prohibition,86 the general authority in Whitehead v Tuckett was, unmistakably, a species of actual, external authority. No apparent authority in the agent was envisaged by the court nor could it be maintained where the principal was undisclosed.87 It would be equally impossible to assert that the agent had any form of actual, implied authority to act in contravention of his actual, express authority. Having excluded these possible manifestations of authority, it is irrefutable that the agent's general authority was a pragmatic, real authority, uncluttered by ethereal, apparent authority. Moreover, the third party's protection was paramount and, in terms of risk-allocation where the agent abused the confidence reposed in him by the principal, the [principal] who entrusted [him] and not the plaintiffs, the innocent purchasers, must suffer for it.88

The name over the door: shops, businesses and managerial agency

Atiyah's assertion, mentioned earlier, that there was a somewhat vague notion that a man who received some benefit from an enterprise ought to bear his share of any losses arising from it was particularly evident at the start of the nineteenth century except that it was, arguably, much more than a vague notion. Some of the earliest cases had framed the

principal's accountability for his agent's acts as a strict liability and almost in terms of a duty not to cause loss to innocent third *J.B.L. 408 parties.89 It became clear that the owner of a business was broadly responsible for his agent's transgressions, this responsibility being reinforced by a presumption that certain individuals were agents with authority to bind their principals in all transactions normally connected with the business. Underlying this strict approach was a need to guard against fraud. The principal might choose to remain undisclosed and assert the validity of a private restriction on the authority of the agents who conducted the workaday trade of the shop or business in question or, worse still, simply deny his role as principal in the business. Accordingly, the early decisions display a deep-seated suspicion of the owner of a business who remained hidden. Modern estoppel reasoning insists that it is impossible for a third party to be misled by a principal of whom he has no knowledge. This approach was inverted in the older cases on the basis that there is no better way to deceive and shirk responsibility than to remain concealed behind a faade. In an era when all businesses were carried on by individuals, this attempted evasion of responsibility was unacceptable and the ascription of personal liability was a necessity. The court was resolute in imposing liability on the principal in Perry v Anderson. 90 The defendant had carried on business as a confectioner but had been imprisoned for debt. During his absence, his wife ran the business on her own account and the defendant's Christian name, Andrew, had been erased from the shop's front leaving only the wife's name, Anderson, on the outside of the shop. Several tradesmen had given credit to the wife and she paid the rent and rates on the premises. After the defendant's discharge from prison, the plaintiff supplied necessary goods for the business and, although the defendant had been repeatedly seen in the shop during the period in which the goods had been supplied, the receipts and invoices were made out in the wife's name. In view of this, it is unclear why the plaintiff sought payment from the defendant but, when called on for payment, the defendant stated that he was a mere journeyman to his wife and received no wages, adding that the plaintiff had better not go to law, or perhaps he would get 4s in the pound. There is surely very little evidence of an agency on these facts unless the relationship of principal and agent is imposed upon the parties and thus deemed to exist. This, however, was the exact conclusion arrived at by the court. Best C.J. considered that the threat of not going to law *J.B.L. 409 identified91 the defendant with the business and proved his knowledge of his wife's transactions. Above all else, however, the plaintiff took advantage of the trade that was carried on, by living on the profits, and a legal presumption arises from that circumstance, that the wife conducted the trade as his agent.92 Accordingly, the defendant was liable for the price of the goods

delivered. The strength of this decision was matched by that in Barrett v Deere, 93 where an impostor, who had somehow managed to obtain a seat in the plaintiff's countinghouse, took payment of a debt from the defendant and gave him a receipt. Although the money was never received by the plaintiff, the payment was held to be a good settlement of the debt because the debtor has a right to suppose that the tradesman has the control of his own premises, and that he will not allow persons to come there and intermeddle in his business without his authority.94 It hardly needs emphasising that there was no evidence of any holding-out on the facts of either of the two cases above and, if modern legal reasoning would have difficulty locating a principal-agent relationship in Petty v Anderson, it would categorically disavow any possibility of an agency in Barrett v Deere on the basis that there was no causal link whatever between the principal and his supposed agent. At the start of the nineteenth century, however, the privilege of owning a business and the concomitant profits to be garnered from proprietorial endeavour were clearly tempered by a swingeing duty and responsibility owed to third parties. There is, moreover, a remarkable similarity between the approach adopted in Petty v Anderson and that evinced in Watteau v Fenwick some 70 years later. Although responsibility was imposed upon the principals in Petty v Anderson and Barrett v Deere, the decision in Rose v Edwards 95 displayed a greater concern for justifying the principal's liability. The latter case also accepted as self-evident that, in the context of shops and businesses, the agent's general authority embraced acts and transactions which were innate and indispensable in the management of the business. Moreover, the decision accentuates decisively that general authority existed independently of any type of apparent authority. In Rose, William Edwards dealt in china and had a shop in Shepherd's Market, London, but as he had become insolvent, he assigned the business to his brother, John Edwards, and it was the latter's name that was inscribed over the door. William remained as a manager in the shop along with his wife and John's wife. The creditors agreed to take a composition of 5s in the pound with 2s 6d to be paid by each brother but, although John paid the composition, William did not. At the time of his insolvency, William had been indebted to the plaintiffs who now pressed for payment and so he offered a bill of exchange in payment and, as the bill was for a sum exceeding the amount owed to the plaintiffs, William directed that goods should be supplied to the shop equal to the amount of the *J.B.L. 410 balance. John's name was on the bill as the indorser, but it was proved not to be in his handwriting and not to have been written by his authority. The plaintiffs contended that, although they might not recover the whole amount of the bill, they were entitled to recover the price of the goods supplied to the shop but the defendant, John Edwards, argued that his brother had no authority

to enter into this contract. The jury found that William, the agent, had general authority to buy goods on his principal's behalf but the salient aspect of the decision is that this authority did not derive from any holding-out by the principal. Instead, both the arguments of counsel and the judgment of Lord Abinger C.B. focus upon whether the principal had held himself out to the world as the proprietor of the shop with attendant liability for contracts entered into on his behalf. The court found that John Edwards had thus accepted responsibility in that his name was on display over the shop, he had stated to third parties that he was answerable for all orders given at the shop and had, in fact, paid for goods ordered by persons in the shop and, finally, that he allowed his brother to conduct the business on his behalf. These acts and representations are, of course, paradigmatic of apparent authority in an agent but, in Rose v Edwards, the court separated the principal's conduct upon which his responsibility was founded from the agent's general authority to act on his principal's behalf. General authority was thus regarded as a self-standing authority which did not emanate from the principal's representations but, instead, derived from the fact of being appointed as a manager in charge of a business.96 In the middle of the nineteenth century, the decision in Smith M'Guire 97 was also quintessential of this approach. There the defendant, Thomas M'Guire, had carried on business as a corn merchant in Limerick but he moved to London and left his brother, Martin M'Guire, to conduct the business in Limerick as his agent. The defendant's name remained over the door of the business. Over a period of three years, Martin M'Guire purchased oats and chartered ships on account of the defendant but the latter normally gave his brother special instructions. On one occasion, Martin M'Guire chartered a vessel to carry a cargo of oats from Limerick to London, signing the charter-party per procuration of Thomas M'Guire, but the defendant refused to load a cargo pursuant to the charter-party. The defendant contended that his brother had no general authority to charter vessels for him, that he had sent special instructions as to chartering on former occasions and that he had never authorised his brother to sign this particular charter. Nevertheless, the defendant was held to be liable on the contract as his agent had a general authority and no private, special limitations on the agent's authority could be allowed to prevail. Watson B. considered that throughout, he acted generally in the purchase of oats and the chartering of ships, and that was cogent evidence for the jury that he was a general agent.98 Most importantly, *J.B.L. 411 Pollock C.B. held that, once the general agency had been established, the principal is bound, although, as between him and the agent, he takes care on every occasion to give special instructions; and I think it makes no difference whatever, whether the agent acts as if he were the principal, or professes to act as agent .99 Just as significantly, Martin B. was by no means certain that a

person who employs an agent, in the way in which Martin M'Guire was employed, is not liable for every honest contract entered into by him for the purpose of the business in which he is engaged .100 These broad statements underscore, to a remarkable extent, the fact that general authority emanated from the agent's status as a manager of a business and the scope of such authority--entering into contracts which were usual in that business--is also not left in any doubt. This view of general authority is also reinforced in that, in Smith M'Guire, there was no course of dealing with the third party upon which an apparent authority could be based and, of course, it is the single act of the sort in Smith M'Guire that causes so many difficulties for the modern law on apparent authority. Having eschewed the notion that apparent authority can be generated, per se, by the principal's appointing the agent to an office or position,101 the law now has to exercise some ingenuity if it is to arrive at the conclusion that was reached in Smith M'Guire and, when an agent's installation in a position is accentuated as the basis of apparent authority, the assertion looks awkward and artificial within current legal orthodoxy.102 Once it is realised that general authority was regarded as a form of actual authority that attached to the agent and that the principal was broadly responsible for his agent's acts within the scope of that general authority, it matters little whether the principal was disclosed or undisclosed. Certainly the decisions drew no distinction between these two types of agency but it is arguable that, following the lead set by Pickering v Busk and Whitehead v Tuckett, there was a greater inclination to impose liability on the principal where the agent acted as the ostensible owner of the business. This was the position in Edmunds v Bushell and Jones, 103 where Jones installed Bushell to manage his business and authorised him to run it in the name of Bushell & Co. Bushell was authorised to draw cheques for the purposes of the business but he had no authority to draw or accept bills *J.B.L. 412 of exchange even though the drawing of bills was incidental to the ordinary conduct of the business. Bushell did, however, accept a bill in the name of Bushell & Co and the third party, an indorsee of the bill, sued Jones on it. It was held that Jones was liable. The decision is often regarded as incorrect104 in that the judgments talk in terms of authority when Bushell was an ostensible principal and the actual principal, Jones, was undisclosed. Bushell did undeniably possess the authority to manage the business, however, and the decision is based on this overall, managerial authority, which could only be strengthened by the fact that Bushell had not been placed in a servile position. Cockburn C.J. thus stated that it is clear, therefore, that Bushell must be taken to have had authority to do whatever was necessary as incidental to carrying on the business105 and this was held to be a well-established principle.106 It was, of course, this well-established principle which the court applied in Watteau

v Fenwick, 107 a decision which, it is submitted, thus stands at the end of a long line of cases based on the actual, general authority of the manager of a business. Heard in 1892, there are signs in Watteau v Fenwick of the decline of the earlier notion of general authority and the superimposition of apparent authority as the working ideal in this context--a fact revealed by a most telling intervention of Lord Coleridge C.J. during the argument. Counsel for the defendant had asserted confidently that, where there was no holding-out by the principal and the business was carried on in the agent's name, a person wishing to go behind the agent and make the principal liable must be able to establish an agency in fact, but Lord Coleridge C.J. retorted with the question, cannot you, in such a case, sue the undisclosed principal on discovering him?. The Lord Chief Justice died in 1894, at the age of 74. It seems likely that, at the end of a long career during the nineteenth century, he presumed the agent's authority in Watteau to be an actual, general authority, thus leaving no doubt that the undisclosed principal should be liable on the facts of the case.

Why did general authority decline and apparent authority prevail?

Several, independent reasons, conspired to detract from the utility of general authority and, together, they were fatal to the old reasoning. First, the external authority created in Pickering v Busk almost immediately came into conflict with the accepted rule nemo dat quod non habet : in comparison with that established principle and the axiom caveat emptor, the Pickering analysis was objectivity run riot. The difficulty with the Pickering reasoning was that it seemed overlypermissive. An authority to sell could, in principle, be created in another without too much difficulty and this, when coupled with the decision's unequivocal preference for the third party's perspective, had the capacity to undermine nemo dat quod non habet. Not long after the decision in Pickering, Abbott C.J. *J.B.L. 413 staunchly reaffirmed that the general rule of the law of England is, that a man who has no authority to sell, cannot, by making a sale, transfer the property to another. There is one exception to that rule, viz. the case of sales in market overt.108 The common law's adherence to nemo dat and its preference for the protection of vested proprietary rights was evidenced by the need for no fewer than five Factors Acts during the nineteenth century. Secondly, there are two decisions that are universally regarded as the foundation of the law on [estoppel by representation]109 and, as both Stoljar110 and Atiyah111 have stressed, in the second half of the nineteenth century estoppel reasoning harmonised with consensual theories of contractual liability when the courts looked for some plausible basis on which to rest the principal's liability where he had not authorised the agent's act.112 From 1850 onwards, the concept of apparent authority in the form of holding-out and estoppel increasingly

became the touchstone of liability and many decisions were premised exclusively on that ground.113 Other cases were less certain of their footing and mixed the notion of general authority with that of holdingout.114 Regrettably, by the start of the twentieth century, apparent authority had become entrenched, inflexible and constricted in scope. In Farquharson Brothers & Co v King & Co, 115 the Earl of Halsbury L.C. poured cold water116 on the notion that the principal could be estopped by enabling117 the transaction with the third party and, in Rimmer v Webster, 118 where it would have been difficult to contrive facts that were a clearer paradigm of estoppel, Farwell J. felt it necessary to express his disapproval of Ashhurst J.'s obiter dictum in Lickbarrow v Mason. 119 *J.B.L. 414 Thirdly, more important than either of the first two reasons for the decline of general authority was the fact that the notion could function only within certain static contexts and, unlike apparent authority, it had virtually no potential for development or expansion. Paley had defined a special agent as one who is employed about one specific act, or certain specific acts only, [and] does not bind his employer, unless his authority be strictly pursued: for it is the business of the party dealing with him to examine his authority .120 This definition assumed that the third party was able to tell when he was dealing with either a general or special agent and, indeed, this must often have been the position in the early disputes regarding the sale of horses in rural England. Once the agent was detached from the setting in which either his or his principal's status was obvious, the agent's categorisation as a general or special agent could be neither ascertained nor verified, and the third party would not know when it was incumbent upon him to make inquiries. The position was straightforward where the third party dealt with a shopman or manager of a business at the shop or business in question, but the agent's general authority could not readily be sustained outside those strict confines. This difficulty was exposed in Summers v Solomon 121 which, being heard in 1857, is illustrative of the transmutation of general authority into apparent authority and the confusion generated as a consequence. The defendant, who lived in London, had a jeweller's shop at Lewes which was managed by his agent. The plaintiff, a jeweller who carried on business in Hatton Garden, had received orders from the agent, at Lewes, for jewellery to be sent to the shop there on the defendant's credit. The goods had been sent to the shop and accepted by the defendant. On one occasion, the agent absconded' from the shop and went to London where he ordered jewellery, stating that it was for the defendant, and that he would take it back with him to Lewes. The agent appropriated the jewellery and the defendant learnt of this order only when he received a demand for payment. Both the arguments and judgments are preoccupied with questions of location. Was the agent's authority limited to orders given in

the shop at Lewes and did the facts thus approximate to a cook or other servant living under the domestic control of a master who could not order goods anywhere other than in the master's home? Alternatively, as the plaintiff knew of the agent's authority to order goods, did this mean that the authority could be exercised in any location? The first question clearly relates to general authority but the second is pertinent to an appraisal of apparent authority and, in fact, the judgments mix both of these concepts.122 Lord Campbell C.J. held that there was evidence that the agent was the defendant's general agent for conducting the business; and the [agent], within *J.B.L. 415 the scope of such general authority, might procure goods in London to be taken by him to Lewes: and the plaintiff had every reason to infer such general authority, and to deliver goods which were required as for an old customer.123 If the facts of Summers v Solomon were repeated today, the case would turn upon whether the claimant was put on inquiry but, in modern commercial conditions, it is unlikely that he would be deemed to have notice of lack of authority in the agent. Irrespective of the conclusion reached by the court on this question of fact, the outcome would surely not, today, be regarded as controversial or wrong but, one year after the decision in Summers v Solomon, Bramwell B. stated forcefully that he could not assent to the law as laid down in that case.124 This aside, delivered in argument, was not elaborated upon but it is suggested that Baron Bramwell considered that the agent in Summers v Solomon could not possibly possess general authority to order goods in any place other than the shop which he managed. By ordering the goods in London, the agent's general authority was dislocated and destroyed and the notion that a principal might mislead the third party by a continuing representation of authority in the agent was seemingly too mercurial for Baron Bramwell in 1858. It is self-evident that general authority would have had difficulty in adapting to cope with the problems generated by agency in transnational, impersonal, corporate commerce. At the end of the nineteenth century, the limited contexts in which general authority could be applied were also evident in the decision in Johnston v Reading. 125 This case illuminates the general, usual authority expounded in Watteau because, significantly, Lord Coleridge C.J. was the presiding judge. The issue in Johnston was whether a commercial traveller for the plaintiff, a firm of wine merchants, who had agreed to pay his own expenses, could bind his principal for the hire of vehicles on credit. It appears that the principal was undisclosed; the defendant, who was being sued for 12 on a balance of account for wine, set up a counterclaim for 20 for the hire of vehicles by the agent and contended that there was a usage of travellers thus to charge their principals, citing Watteau v Fenwick in support of this argument. Astonishingly, the County Court judge had given judgment for the defendant but, in allowing the plaintiff's appeal, Lord Coleridge C.J.

stressed that the ground of the judgment in Watteau was that the articles ordered by the manager of the business were such that the business could not possibly be carried on without them, and was obliged to order them. In other words, the authority of a manager of business to order necessary goods for that business was a usual, general authority possessed by an agent of this certain and limited class,126 and it was not the business of the third party to *J.B.L. 416 verify the extent of such a manager's authority. It would be impossible, however, to apply this succinct reasoning to the facts of Johnston where the peripatetic agents in question neither belonged to any identifiable mercantile category nor were they engaged in any recognisable, established class of business. At the dawn of the twentieth century, two decisions marked the demise of general authority as a practical concept and both cases were, most aptly, concerned with horses and forage, as in the foundational cases on general authority. In Wright v GIyn, 127 the defendant paid his coachman a fixed weekly amount to provide for forage and the cost of shoeing his horses. The coachman asked the plaintiff to supply the forage, stating that he was coachman to the defendant and, whilst the plaintiff did not contact the defendant personally, he made inquiries as to his position and, having received satisfactory answers, he supplied the forage for a considerable time. The defendant never had any dealings with the plaintiff. The coachman did not pay for the goods thus supplied and the plaintiff sued the defendant for the cost. At first instance, Grantham J. held that the plaintiff should succeed on the authority of the two leading decisions on general authority considered earlier--Precious v Abel 128 and Rimell v Sampayo. 129 In the Court of Appeal, the arguments were vignettes of the old, general authority versus the new, apparent authority. Counsel for the plaintiff paid lip-service to ostensible authority but the crux of his argument was that if a servant is performing an act within the scope of his ordinary service, a tradesman is justified in assuming that he has authority, and is not put on inquiry. 130 On the other hand, the defendant's confident, contemporary assertion, was that an agent could possess only actual and ostensible authority: here there was patently no actual authority and the mere fact of the relation of master and servant is not sufficient to shew that the latter is entitled to pledge the credit of his master.131 Collins M.R. held that the plaintiff must fail and he unerringly accepted the defendant's contentions. There was no evidence of any holding-out by the defendant of the coachman's authority to pledge his credit as it certainly cannot be said, as a matter of law, that a coachman or groom has ostensible authority to pledge his master's credit for forage for his horses. The mere relation of master and coachman does not of itself involve as a matter of law such authority.132 Consequently, it was held that no general authority emanated from the agent's position : the argument

that it was common knowledge that coachmen have prima facie authority to pledge their masters' credit was dismissed out-of-hand. Finally, in case there should be any doubt, the two decisions on general authority approved by Grantham J. were consigned to legal limbo as having been decided on special facts.133 *J.B.L. 417 The second case, Barrett v Irvine, 134 banished general authority from the law with the same degree of lucidity shown in Wright v Glyn. In Barrett, a mother allowed her son, a minor described as the spoilt lad,135 to keep a pack of hounds at her home and she paid for his equipment and livery as Master of the Roscarberry Foxhounds. Although she disapproved of her son's sporting proclivities, the mother attended race meetings with him and she had, on several occasions, paid for horses that her son had bought. The plaintiff, who knew of these purchases, sold a horse to the son and the latter assured the plaintiff that his mother would pay. The mother was in Scotland at the time of the sale and had not given her son any actual authority to purchase the horse. In an action against the mother for the price of the horse, the plaintiff argued that the son was a general agent for the purchase of horses. It was held that the defendant was not liable: there was no evidence of a general agency, nor was there any holding-out by the mother that her son had authority. The judgments tend to mix apparent authority and general agency and these separate notions thus coalesced into a holding-out of general agency.136 Gibson J. isolated the two concepts, however, and acknowledged that a multiplication of acts by a special agent did not convert him into a general agent and, in contrast with the old cases on general agency, he held that the position in Barrett was quite different from the acts of an employee who in the employer's absence is put forward to do certain acts in the course of business. There the recognition of such acts is evidence as to the scope of authority.137 Most significantly, the plaintiff's forlorn contention that general agency will be inferred where a landed proprietor sends his steward habitually to the neighbouring farms and markets to make sales and purchases for him in matters connected with the management of his estate138 had been exposed as an anachronism at the start of the twentieth century. In relation to the management of businesses, the beginning of the twentieth century witnessed the eclipse of the reasoning that had been proclaimed so boldly in Petty v Anderson and Watteau v Fenwick. In the curious case of MacFisheries Ltd v Harrison, 139 the defendant, the licensee of a public house, entered into an arrangement with the general manager of the brewers, who were the owners of the premises, under which a Mrs Squires was to become the tenant of the licensed premises. The licence was not transferred into Squires's name but, instead, it was the defendant's name that remained over the door as the licensee. It seems as though Squires would not have obtained a licence had she applied for one and so this illegal arrangement was entered into. The

court acknowledged, however, that *J.B.L. 418 the brewers were entirely ignorant of the impropriety. Presumably some advantage accrued to the defendant from this devious scheme, but it was accepted that there was no evidence of his receiving any profits from the business, which he never visited. Mr Dean, a manager of the plaintiff fishmongers, frequented the public house and became acquainted with Squires from whom he obtained orders for goods. Dean perceived Squires to be the licensee as he had never seen the defendant's name over the door. Squires became bankrupt and, on her failure to pay for the goods supplied, the plaintiff made inquiries and discovered the defendant to be the licensee. The plaintiff's contentions were that, first, there was an agency relationship here because, under the relevant legislation the only person who could sell intoxicating liquor on licensed premises was the licensee or his agent and, secondly, that the defendant was estopped from denying that Squires was his agent for the purpose of carrying on the business. Swift J. held that the managing of the business was insufficient to constitute Squires as the defendant's agent in fact140 and that the estoppel argument must also fail as the plaintiff was unaware of the defendant's name over the door as licensee. Had the plaintiff taken the trouble to look at the door he might have come to the conclusion that Mrs Squires was the agent of the licensee because there was there a statement for all the world to read which amounted to a representation of that fact.141 Any notion of imposing liability on the defendant because he was identified with the business, as in Petty v Anderson, had long since disappeared leaving only consensual, estoppel reasoning. If, at the start of the twentieth century, the older notions of general authority appeared to be unrefined and heavy-handed, the hurdles that the plaintiff had now to cross in order to establish an estoppel might easily isolate the defendant from liability. In the MacFisheries case, Swift J. commented that he did not need to consider what would have been the position if the plaintiffs had alleged that Mr Harrison had fraudulently conspired with Mrs Squires to induce them to believe that she was the licensee, and to give credit to her as such to their damage. To such a case there might or might not be an answer.142 It was precisely this danger which was obviated by the earlier decisions such as Watteau v Fenwick but which, somewhat disconcertingly, might not be averted by the rigorous chain of causation in estoppel. Certainly the defendant was left unscathed by the machinations in the MacFisheries case.

Conclusion

The rationale of general authority was that the principal's responsibility and the agent's authority both emanated from the relationship of principal and agent per se. This was an actual authority that could not be negated by the principal's private instructions given to the agent and, in terms of public policy, it facilitated the unimpeded progress of early

commerce and adopted, uncompromisingly, the third party's standpoint. General authority existed only where established types *J.B.L. 419 of agent performed acts that were, unmistakably, characteristic of the species of intermediary involved. When commerce became more complex and impersonal it became increasingly difficult to assert that agents who did not belong to any recognised category could possess an irrefutable core of general authority which radiated exclusively from position or status and, at least in theory, apparent authority seemed to provide a logical justification for the principal's liability once the functions of commercial agents had begun to broaden and mutate. Moreover, the ascription of responsibility in a corporation was clearly not as straightforward as fixing an owner/principal with direct personal liability for his groom, shopman, or manager of a small business. During the latter part of the nineteenth century, it became taxing, if not impossible, to square the imposition of liability on the principal for acts within his agent's general authority with laissez-faire ideals and, most particularly, there was here a pronounced incongruity with the dominant precept of freedom of contract. This was particularly so where there was an undisclosed principal and the agent's general authority was held to prevail over the principal's express prohibition of certain acts, as in Watteau v Fenwick, in that there was nothing other than the existence of an agency upon which to pin liability. Indeed, at the end of the nineteenth century, the entire doctrine of the undisclosed principal came to be seen as aberrant and theoretically unsustainable.143 On the other hand, apparent authority and estoppel reasoning coincided with consensual theory, and the doctrine of holding-out appeared to have an inherent elasticity to adapt to changing commercial conditions, relationships and transactions. It is thus ironic that, during the twentieth century, the common law's obdurate refusal to permit an estoppel to be established against the principal means that apparent authority has become evanescent in both name and nature. This is particularly evident in decisions concerned with unauthorised dispositions of property by agents and apparent owners144 but there has also been a marked reluctance to acknowledge the agent's apparent authority when entering into other contracts.145

What is wrong with apparent authority? (1) Theoretical basis

The notion of general authority was the antipode of the modern doctrine of apparent authority. The dominant postulate of general authority was that the *J.B.L. 420 principal must bear overall responsibility for creating and utilising a particular type of intermediary, the general agent. In contrast, apparent authority is premised on the nineteenth century model of consensual liability and, in eschewing responsibility and duty in the principal, it insists that he can be liable to the third party only

where he has represented unequivocally that his agent possesses authority. Consequently, whilst general authority focused on the role and status of the agent which was clearly visible to the third party, it is quite remarkable that the agent is characterised as an anonymous outsider in the scheme of liability envisaged by apparent authority. In Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd, 146 for example, Diplock L.J. accentuated that, in actual authority, the third party is a stranger to the internal relationship of principal and agent but that, in apparent authority, the positions are reversed in that the agent is a stranger to the relationship between the principal and third party. This clinically objective analysis of apparent authority is plausible only where the principal makes a calculated, detailed representation to the third party, but this degree of unequivocality has always been rare147 and it is virtually nonexistent in impersonal, corporate commerce.

(2) Third party interests

The nineteenth century model of apparent authority has, by and large, failed to protect third party interests and. apart from those situations in which the agent makes an unauthorised disposition of property, there has been minimal statutory intervention to rectify perceived deficiencies in the common law.148 In contrast, the developed doctrine of vicarious liability in tort has been conspicuously successful in prioritising and safeguarding the vulnerable third party who is harmed as a consequence of an employee's negligence. It had become axiomatic by the middle of the nineteenth century that a principal was liable only for those acts of his agent which were authorised: authority had to be conferred by the principal in agency whereas liability was imposed on the employer in employment.149 This emphasis *J.B.L. 421 on an authorised agent is significant in that, both terminologically and substantively, it indicates that a principal will not readily be held to account for his agent's acts.150 The leading English text on the law of agency151 maintains that an imposition of liability is apt where the victim of a tort is an involuntary participant in the events in which he is embroiled but less pertinent in agency where the third party voluntarily enters into contracts and makes informed choices.152 If the rules of apparent authority were adequate to protect the third party this proposition would be a persuasive one, but those rules are skewed so far in favour of the principal that its validity is questionable. In any event, the idealised paradigm of the agent's authority cascading voluntarily from the principal with a third party possessed of freedom of choice and equality of bargaining power, is one that is stereotypical of nineteenth century, laissez-faire attitudes.

(3) Commercial reality

The idealised stereotype of apparent authority with the principal as the fount of all authority, fails to cope with commonplace commercial reality where the principal is a corporation and the concept of authority in the agent means little or nothing to the third party. This is indisputably the

position where the third party is a consumer and here it is likely that he will discern nothing more than the presence of an agent. The rule that the agent's authority must derive unequivocally and exclusively from the principal can be countenanced only where the principal is both accessible and visible, but this is rarely the case in the twenty-first century. Rather, the third party often has no practicable access to the principal and he can trust only to the agent's position and status and the fact that the agent is one component within the principal's business machinery. A corollary of this is that the unfortunate third party has frequently to accept the assurances given by the agent regarding his authority and, whilst this seems innately reasonable in multi-layered corporate commerce, the assertion that the principal should be bound by such promises is anathematical to apparent authority in that, in such a case, the agent is said to hold-out himself and thereby create his own authority.153 In the modern commercial setting, it is increasingly unrealistic both to justify the principal's liability and gauge the extent of the agent's authority by employing the ethereal reasoning of representation, reliance and estoppel.

*J.B.L. 422! Should general authority be revived?

Although general authority applied originally to specific types of agent, there is surely a case to be made for reviving many of the organising features of this former ideology.154 It is suggested that, first, there is no compelling reason to deny group status to agents when employees have long been aggregated in this way within the rules of vicarious liability, and it should not be an insuperable task for the courts to ascertain the usual or general authority possessed by modern, commercial agents. A familiar criticism of usual authority as envisaged in Watteau v Fenwick is that it is too vague to be satisfactorily employed155 but ascertaining the scope of an agent's usual or general authority cannot be any more exacting than establishing whether or not an employee is acting in the course of his employment. Secondly, although it is asserted in the leading text that agency should be viewed as a notion facilitating commerce rather than as part of a generalised area of law providing compensation for the acts of others156 it is surely fitting, as a question of allocation of risks, that the principal should carry overall responsibility for his agent's infractions which cause loss to the bona fide third party. Finally, it is incontrovertible that apparent authority is a concept that is awkward and artificial in modern commercial conditions. It is time to revert to the theories that underpinned general agency, focus attention on an objective assessment of the agent's position and accept that the principal's overriding accountability for his agent's transgressions is not a violation of freedom of contract but, rather, it is a necessary encroachment on that doctrine that is now long overdue. J.B.L. 2004, Jul, 391-422