LEGAL PRINCIPLE: COMMERCIAL LAW – Principal and Agent – Agent Cannot Act Beyond Authority – Effect on Third Party
PRINCIPLE STATEMENT
In the absence of any other evidence beyond that of P.W.1, Sumbo Onitiri, I must hold that Exhibit A, is not a mandate for the firm of Sumbo Onitiri to negotiate the sale of the property without first informing its principal, the 1st appellant. It is also my view, and I so hold, that the firm of Sumbo Onitiri as agent of the 1st appellant went beyond the authority given to the Firm by the 1st appellant, in the transaction conducted with the respondent.
RATIO DECIDENDI (SOURCE)
Per Ejiwunmi, JSC, in Incar Nigeria Plc & Anor v. Bolex Enterprises (Nig.) (2001) NLC-501996(SC) at pp. 32–33; Paras E–A.
"In the absence of any other evidence beyond that of P.W.1, Sumbo Onitiri, I must hold that Exhibit A, is not a mandate for the firm of Sumbo Onitiri to negotiate the sale of the property without first informing its principal, the 1st appellant. It is also my view, and I so hold, that the firm of Sumbo Onitiri as agent of the 1st appellant went beyond the authority given to the Firm by the 1st appellant, in the transaction conducted with the respondent."
EXPLANATION / SCOPE
An agent acting beyond authority does not bind the principal. The third party dealing with the agent cannot hold the principal liable for unauthorised acts. The agent must act within the scope of actual or apparent authority. If the agent exceeds authority, the third party’s remedy is against the agent for breach of warranty of authority. The principal is not bound by unauthorised negotiations or agreements. The third party bears the risk of verifying the agent’s authority. The principle protects principals from unauthorised commitments. The agent may be personally liable for exceeding authority. The court will not imply authority where none exists. The principal’s mandate must be strictly followed.