First Energy (U.K.) Ltd. v. Hungarian International Bank Ltd. - Court of Appeal (Nourse, Steyn and Evans L.JJ.) - 24 February 1993

Agency - Whether agent without actual authority had ostensible authority to communicate that authority had been obtained from principal to make offer of load facility

At the trial, the issue was whether the plaintiffs had established a breach of contract relating to a loan facility to be given by the defendants to the plaintiffs. Two principal questions had arisen for decision. The first was whether the plaintiffs had prima facie established the conclusion of a binding agreement. That question resolved itself into an issue as to whether the defendants had made an offer capable of acceptance. The judge decided that issue in favour of the plaintiffs. Secondly, the question had arisen whether the prima facie agreement was defeasible on the ground that the defendants’ agent had no authority to make the offer. The agent did not have actual authority to do so. The question was whether the defendants had conferred ostensible authority on the agent (a) to make the offer or (b) to communicate that the necessary authority had been obtained from the defendants to make the offer. The judge decided that issue in favour of the plaintiffs on the basis set out in (b).