Lloyd's Maritime and Commercial Law Quarterly
SOME WEAR AND TEAR ON ARMAGAS V MUNDOGAS: THE TENSION BETWEEN HAVING AND WANTING IN THE LAW OF AGENCY
Peter Watts*
In the decades following Armagas v Mundogas , a leading case on some basic principles of agency law, the case has become surrounded by at least as many lukewarm lieutenants as stout defenders. There is in fact an understandable tension between not subjecting persons to transactions to which they have demonstrably not agreed and protecting the expectations of those who not unreasonably have trusted an intermediary to report accurately their principal’s willingness to transact. Protecting expectations, including “the security of contracting”, is generally more fashionable among lawyers now than it once was. This article addresses two of the holdings in Armagas (the need for a holding-out by a (non-consenting) principal as to an agent’s authority before liability arises in either contract or the tort of negligent misstatement) and two of the dicta (being put on inquiry as to a lack of authority, and the unreliability of a course of dealing between the parties), and reviews the pronouncements of United Kingdom and England and Wales judges on each of them. The article seeks to reinforce Armagas on the first three, but not the last.
Background
Armagas Ltd v Mundogas SA (The Ocean Frost)1
has been a beacon in the law of agency for nearly 30 years. Apart from the fact that it is relatively rare for agency law to be the focus of a second appeal, the status of the case has been enhanced by the judgment of Robert Goff LJ in the Court of Appeal, the core reasoning of which was largely adopted by Lord Keith of Kinkel in the sole reasoned speech in the House of Lords. In addition to its holdings, Robert Goff LJ’s judgment is rich in obiter dicta.
However, a stock-take of Privy Council and England and Wales case law since Armagas produces an accretion of footnotes around both the rationes decidendi and the dicta in the case. There is a common, albeit not very visible, thread to these footnotes. That thread favours those who want over those who have. Those who want are the would-be
* QC, Professor of Law, University of Auckland. This article is a revised version of the Annual John Thornely Lecture delivered in London in April 2014 while the author was a Herbert Smith Freehills Visitor to the University of Cambridge. The author is most grateful to the firm, Sidney Sussex College, and the Cambridge Law Faculty for their support.
1. [1986] AC 717.
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