The High Court has held that an agent had sufficient authority to enter into a personal guarantee and indemnity (contract) on the principal’s behalf, based on the parties’ twenty-year working relationship and previous course of dealings.
The principal had left the management of his businesses wholly to the agent (who was also his father-in-law). The principal did not expect the agent to keep him informed of the details of the business transactions, and the principal knew that he was not being kept informed.
The agent also utilised a signature machine to execute the principal’s signature on legal documents, and it was held that the principal was aware of this practice. A dispute arose as to whether the agent had authority to commit the principal to the contract using the signature machine.
The judge found on the evidence that the parties’ long relationship was one of total trust (strengthened by their family ties) and the agent “plainly had extensive authority” to act on the principal’s behalf in relation to the contract.
Further, the principal had previously given similar contractual undertakings through the agent, and there were no express or specific limitations on the agent’s ability to deal with any business or contractual matters. The agent had not exceeded his authority and the principal was therefore bound by the contract.
This case is a useful reminder for principals that they should create a clear record of the scope of their agents’ authority, in order to avoid and/or manage similar disputes. It also illustrates that signature machines can effectively bind a party to an agreement if there was appropriate authority to use it.
Case: Gordon James Ramsay v Gary Love [2015] EWHC 65 (Ch), 20 January 2015, Morgan J (Bailii).