Making Commercial Law: Essays in Honour of Roy Goode

By Ross Cranston; Royston Miles Goode | Go to book overview

10
When is an Agent's Authority Irrevocable?

FRANCIS REYNOLDS

It is a standard proposition in the law of agency that the principal may revoke the agent's authority at any time, even if he promised for consideration or even by deed that the authority was to be irrevocable or would not be revoked, whether for a specified period or without limit of time!1 The reasoning is that the principal is conferring on the agent the power to commit him: the power is such a strong one that the principal must be free to call it back. It may of course be a breach of contract to do so. If so the principal will be liable in damages. But the equitable remedy of specific performance is not normally available in favour of the principal nor of the agent: personal services are involved to which it would not normally be applicable. This would, at least normally, also bar an injunction against revocation. In Hohfeldian terms the principal has the power to revoke but may not have the liberty to exercise the power: to do so may be a breach of contract. The revocation is nevertheless effective. As regards pure agency law these propositions must be correct.

It is also a standard proposition that an agent's authority is terminated by his principal's death or supervening mental incapacity; though here of course the justifying reasoning is different -- there is no revocation, but the situation becomes such that there is no principal, or no capable principal, for whom the agent can act. The rule as to death has its counterpart in the dissolution of a partnership, and similar rules may apply where a company is dissolved, or where an individual principal becomes bankrupt or a company insolvent. Apart from brief reference to partnership, it is not proposed to refer to situations of this type other than that arising from death, for they are apt to be specifically regulated by statute in different jurisdictions.

There are however exceptions. The questions relate to how far these go.


Accrued personal liabilities of agent

A noticeable group of cases suggest that authority is in some circumstances irrevocable, but use this reasoning unnecessarily. They are cases where an agent incurs personal liabilities in acting on behalf of the principal while he

____________________
1
e.g. Bowstead and Reynolds on Agency, 16th edn. ( 1996), Art. 122.

-259-

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