“Court establishes definitive test for apparent authority in company law”
Buckhurst Park Properties was a company with four directors, including Kapoor who acted as managing director without formal appointment. Kapoor engaged Freeman & Lockyer (architects) to apply for planning permission and prepare plans. When the company refused to pay the architects' fees, they sued for payment.
Whether a company could be bound by contracts made by a person who had no actual authority but appeared to have authority to act on the company's behalf.
The Court of Appeal held that the company was bound by the contract. A principal can be bound by the acts of an agent with apparent authority even when that agent lacks actual authority.
Lord Diplock established a four-part test for apparent authority: (1) a representation that the agent had authority to enter into a contract of the kind sought to be enforced was made to the third party, (2) the representation was made by someone with actual authority to manage the company's business, (3) the third party was induced by the representation to enter the contract, and (4) under its memorandum or articles of association the company was not deprived of the capacity to enter into a contract of that kind or to delegate authority to enter into it.
This case remains the leading authority on apparent authority in UK company law and agency law generally. The four-part test established by Lord Diplock continues to be applied by courts today.
A company can be bound by apparent authority where the board represents that a person has authority to act, even without formal appointment.
The Court of Appeal held the company was bound by contracts made by someone acting as managing director based on apparent authority principles.
It established the modern four-part test for apparent authority, protecting third parties dealing with companies and clarifying corporate representation principles.
Lord Diplock noted that apparent authority is a legal relationship between principal and third party created by representation of authority made by the principal to the third party, intended to be acted upon.
OSCOLA Citation
Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 (CA)
Multiple official and mirror sources — pick whichever loads cleanly on your network.
Common Room
0 comments · About the Common Room →
No comments yet — start the discussion.
Voted-best comments help future students and feed Caselaw's AI study tools.