Tuesday, 17 July 2012

UK: trustees, delegation and ostensible authority

The Judicial Committee of the Privy Council gave its opinion last week in Kelly v Fraser (Jamaicas) [2012] UKPC 25. The court held that the trustees of a pension fund were bound by representations made by a senior officer of a company to which administrative functions had been delegated. Judgment was given by Lord Sumption, in the course of which he stated (at para. [15], emphasis in the original):

An agent cannot be said to have authority solely on the basis that he has held himself out as having it. It is, however, perfectly possible for the proper authorities of a company (or, for that matter, any other principal) to organise its affairs in such a way that subordinates who would not have authority to approve a transaction are nevertheless held out by those authorities as the persons who are to communicate to outsiders the fact that it has been approved by those who are authorised to approve it or that some particular agent has been duly authorised to approve it. These are representations which, if made by some one held out by the company to make representations of that kind, may give rise to an estoppel".

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