LEGAL PRINCIPLE: COMMERCIAL LAW – Agency – Authority of Solicitor – Pledge of Client’s Document – Unauthorised Act Does Not Bind Principal
PRINCIPLE STATEMENT
Any unauthorised tortious or contractual acts of an agent cannot bind the principal.
RATIO DECIDENDI (SOURCE)
Per Achike, JSC, in Labode v. Otubu & Anor (2001) NLC-1721995(SC) at p. 32; Paras D–E.
"It is well settled that any unauthorised tortious or contractual acts of the agents cannot bind the principal."
EXPLANATION / SCOPE
A principal is not bound by unauthorised acts of an agent—whether tortious or contractual. The agent must act within the scope of actual or apparent authority. Pledging a client’s document without authority is an unauthorised act. The principal cannot be held liable for such conduct. The third party dealing with the agent bears the risk of ascertaining the agent’s authority. The principle protects principals from being bound by agents exceeding their authority. The remedy for the third party is against the agent personally for breach of warranty of authority. The principal may also have a claim against the agent for acting without authority. The doctrine of ratification does not apply where the principal refuses to adopt the act.