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ACCA Applied Skills · Corporate and Business Law (Global) · Agency law

Marta appoints Joel as her agent to sell goods. Marta later privately revokes his authority, but does not tell Dunmore Ltd, a customer who has regularly dealt with Joel on her behalf. Joel then sells goods to Dunmore Ltd, which is unaware of the revocation. What is the legal position?

Marta is bound. Revoking actual authority privately does not end apparent authority, which arose from her earlier dealings. Dunmore Ltd had no notice of the revocation, so it can enforce the contract against Marta.

  1. AMarta is bound because Joel retains apparent authority towards Dunmore LtdCorrect
  2. BMarta is not bound because actual authority has ended
  3. COnly Joel is bound, as he acted without actual authority
  4. DThe contract is void because the agency was terminated

Explanation

Revocation ends actual authority between principal and agent, but third parties who dealt with the agent and have not been told may rely on apparent (ostensible) authority created by the principal's earlier conduct. Marta is therefore bound, though Joel may be liable to her for breach of duty. Saying she is not bound ignores third-party protection.

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