First Energy v Hungarian International Bank [1993]

Facts

  • The claimant wished to enforce a contract for a loan to the claimant
  • The defendant claimed that the contract was unenforceable as the ‘senior manager’ of the bank’s local branch misrepresented that he had obtained specific authority to enter into the transaction

Issue

  • Was the contract enforceable?

Decision

  • Yes

Reasoning

  • A senior manager had the inherent apparent actual authority to enter into such a transaction and represent coordination with the bank’s London headquarters
  • A small company could not be expected to confirm that a branch’s senior manager had authority to enter into a transaction by calling up the bank’s headquarters
  • This case distinguished The Ocean Frost [1986], with the use of a senior manager as opposed to a chartering manager, but The Ocean Frost remains as good authority on the point that an agent cannot represent his own authority; the senior manager’s authority was provided by his position in relation to the claimant
RELATED CASE  McEvoy v Belfast Banking Co [1935]

Posted in Commercial Law Revision Notes.

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