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It is clear fact to indicate that the third way in which an individual director may

impose the power to bind his company is by the operation of ostensible authority,
which is alternatively described as apparent authority, or agency by estoppel that
means one is not permitted to deny.
This situation arises when an individual director has neither expressed nor implied
authority. Therefore, the director is appointed by the other members of the board of
directors as having the power to bind the company. Every partner is an agent of the
firm or considered as director and his other partners for the purpose of the business
of the partnership, and the acts of every partner who does any act for carrying on in
the usual way business of the kind carried on by the firm of which he is a member
bind the firm and his partners, unless the partner so acting has in fact no authority
to act for the firm in the particular matter
For instance, look at Freeman and Lockyer v Buckhurst Park Properties (Mangal)
Ltd (1964), even a particular director had never been held out as managing director,
he still played this role with the clear knowledge of the other directors and signed
into a contract with the plaintiffs on behalf of the company. When the plaintiffs
sought to recover fees due to them under that contract, it was indicated that the
company had liability: a properly appointed managing director would have been
able to enter into a contract and the third party was entitled to rely on the
representation of the other directors that the person in question had been properly
appointed to that position.
In this case, the problem is happened the same to Freeman and Lockyer v
Buckhurst Park Properties Ltd. The board of Orange Ltd has permitted Smith to act
as its chief executive, he has even used that title. Although never formally
appointed, Smith took the role and title of chief executive and the other directors
left the day-to-day running of the business to him. The board has therefore agreed
defaultly in his representation of himself as Orange Ltds chief executive and
consequently they and Orange Ltd are tied by any contracts he signed by the role of
a chief executives implied authority. As entering into a contract to draw up plans
would clearly come within that authority, Orange Ltd will have liability to pay Sarah
or confront with sistuation for breach of contract.
It is a well-worn saying that a business partnership is like a marriage. If the
foregoing analysis of the relevant law is correct, it can be assumed that Orange LTd
has been liable to contract with Sarah. If one of the partners signs a contract
normally related to this business the other side can assume it binds all of the other
partners; therefore, this situation can fully apply this duty, because Smith was the
Director of default. It leads to the case that all member were bound by acts on
behalf of firm.