Collen v Wright

Facts

• The defendant's testator acted as land agent for the owner of a farm.
• He agreed to grant the plaintiff a lease of the farm for a term of years.
• He honestly believed he had authority from the owner to grant such a lease.
• In fact he had no such authority, and the owner refused to be bound.
• The plaintiff had incurred expense in seeking to enforce the lease.
• The plaintiff sued the agent's estate for the loss.

Issue

1. Whether an agent who honestly but mistakenly represents that he has authority is liable to the other contracting party for the resulting loss.

Held

• The agent was liable. Willes J held that a person who induces another to contract with him as the agent of a third party, by an unqualified assertion of authority, is answerable to the person who so contracts for any damage caused by the want of authority. The liability rests on an implied contract, or warranty, that the authority exists. It is immaterial that the agent believed in good faith that he had authority, since the warranty is of the fact of authority and not of his honest belief in it.

Ratio Decidendi

Where a person professedly contracts as agent, the law implies a promise to the other party that the authority asserted exists. The promise is absolute, so liability follows from the mere falsity of the assertion. Fault is irrelevant because the warranty allocates to the agent, who is best placed to verify his mandate, the risk that it is defective.