Skip to content

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

Zora Ltd appoints Karim as its agent by a written deed to sell goods in Country X. Karim is told he may sell only to retail customers, but he sells a consignment to a wholesaler, Dalton Co, which has no knowledge of the restriction. Karim's actions were within the type of authority a sales agent in that role would normally have. Which type of authority makes Zora Ltd bound to Dalton Co?

Apparent authority binds Zora Ltd. The principal held Karim out as a sales agent, and Dalton Co reasonably relied on that without knowing of the private restriction. Express authority fails because Karim was told to sell only to retail customers, so the sale exceeded his actual authority.

  1. AActual express authority
  2. BApparent (ostensible) authorityCorrect
  3. CAuthority by ratification
  4. DAuthority of necessity

Explanation

Apparent authority arises where the principal represents, by words or conduct, that the agent has authority, and the third party relies on it. The private restriction was unknown to Dalton Co, so Zora Ltd is bound. Express authority is wrong because the sale to a wholesaler was outside what Karim was actually told.

Did you get it right without looking?

One question tells you little. A timed set on Agency law shows your real accuracy, how long you take and where you lose marks.

Practise Agency lawFree diagnostic mock

More Agency law questions