Q&As

Can an agent execute a collateral warranty as a deed on behalf of its principal where it only has authority to ‘sign contracts on behalf of the principal and do all such other acts in the ordinary course of business’? What formalities (if any) are there for appointing an agent to enter into such deeds?

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Published on LexisPSL on 25/05/2017

The following Commercial Q&A provides comprehensive and up to date legal information covering:

  • Can an agent execute a collateral warranty as a deed on behalf of its principal where it only has authority to ‘sign contracts on behalf of the principal and do all such other acts in the ordinary course of business’? What formalities (if any) are there for appointing an agent to enter into such deeds?

In answering this Q&A, it has been assumed it is referring to an agency relationship between two corporate entities operating in England and Wales and that the agent’s authority has not been extended beyond that set out in the agency agreement, either verbally or by conduct. We also assume that entering into a collateral warranty is not in the ordinary course of business of the principal and the authority to enter into contracts is set out in the agency agreement and not under a separate power of attorney.

As noted in Practice Note: Scope and authority of the agent, an agent’s authority is conferred by its principal. Authority in business matters is usually to introduce, conclude, or otherwise deal with contracts between the principal and customers. Authority may be general, or limited to particular matters. Authority should normally be extended or varied in writing. However, this may occur orally or by conduct.

Contracts made by an agent within the agent’s actual, apparent, or usual authority are binding on the principal. Where an agent exceeds that authority, the agent will be liable to the principal for any loss suffered.

The authority of the agent may be derived expressly from an instrument, either a deed or simply in writing, or may be conferred orally. Authority may also be implied from the conduct of the parties or from the nature

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