LEGAL PRINCIPLE: COMMERCIAL LAW – Estate Agents – Authority of Agent – Agent’s Limited Authority to Find Purchaser
PRINCIPLE STATEMENT
An agent employed by a vendor to find a purchaser is an agent in a limited sense only. He has authority to describe the property and make statements as to its value so as to bind the principal, but he has no implied authority to receive a deposit and no power, without express authority, to conclude a contract to grant a lease or a contract for sale. It is his duty to communicate to his principal the best offer received by him at any time before a binding contract for the sale of the property has been actually signed by the principal.
RATIO DECIDENDI (SOURCE)
Per Ejiwunmi, JSC, in Incar Nigeria Plc & Anor v. Bolex Enterprises (Nig.) (2001) NLC-501996(SC) at pp. 30–31; Paras A–B.
"An agent employed by a vendor to find a purchaser is an agent in a limited sense only. He has authority to describe the property and make statements as to its value so as to bind the principal, but he has no implied authority to receive a deposit and no power, without express authority, to conclude a contract to grant a lease or a contract for sale. It is his duty to communicate to his principal the best offer received by him at any time before a binding contract for the sale of the property has been actually signed by the principal."
EXPLANATION / SCOPE
An estate agent employed to find a purchaser has limited authority: can describe property and state value, but cannot receive deposits or conclude contracts without express authority. The agent’s duty is to communicate offers to the principal. The principal must sign any binding contract. The agent cannot bind the principal to a sale. The principle protects vendors from unauthorised commitments. Third parties dealing with estate agents do so at their risk—they must verify authority. The agent’s limited authority is implied by law unless expanded by express agreement. The agent exceeding authority may be liable for breach of warranty of authority. The principal is not bound by unauthorised acts.