Armagas Ltd v Mundogas SA (The Ocean Frost) [1986]
Facts
- Amidst apparent fraud, an agent purported to conclude an agreement leasing a ship back from its buyer (the principal) for a period of 3 years
- The agent only had actual authority to conclude an agreement which lasted for 1 year
- The agent claimed that he had obtained specific authority for the transaction
- The agent was appointed as the principal’s chartering manager
Issue
- Was the principal bound by the agreement?
Decision
- No
Reasoning
- It follows orthodoxy that a principal may not represent his own authority
- The agent’s title of ‘chartering manager’ did not bring with it the apparent authority to conclude the contract or represent specific authorisation
- It is unusual for a principal to have to obtain specific authority for a particular transaction
