Actual Authority: the Requirement for an Agent Honestly to Believe that an Exercise of Power is in the Principal's Interests

Abstract

This article responds to an argument that agents can still act within their actual authority even though they have no intention of furthering their principals’ interests when purporting to exercise their powers. The argument is unconvincing, even though it has some celebrated supporters, notably Scrutton LJ. Actual authority turns on the principal’s consent, and pursuit of the principal’s interests is an integral part of acting with consent. Indeed, the implicit stricture of promoting the principal’s interests is as fundamental to being an agent as any precise instruction. Other considerations may lead to a conclusion that in the right combination of circumstances the interests of outside parties should prevail over the principal’s. This is the role of apparent authority. There are other possible mechanisms for recognising the interests of innocent outside parties. Hambro v Burnand may furnish one such mechanism, although arguably that case is plain anomalous.