Question 7:

a) Distinguish between an agents actual authority and apparent (or ostensible) authority. (5 marks)

b) Equality Ltd had three directors, Martin, Luther and King. King had always acted as managing director, although he was never officially appointed to the post. The other two directors were aware of the role King undertook and never sought to question this. King entered into a contract with The Brothers Ltd on behalf of Equality Ltd. When the other two directors, Martin and Luther, discovered that the contract was not favourable to the business interests of Equality Ltd they sought to avoid the contract on the grounds that King had no authority to enter into the contract with The Brothers Ltd.

Discuss if Equality Ltd is bound by the contract King made with The Brothers Ltd. (5 marks)

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Question 7 a) Distinguish between an agent's actual authority and apparent (or ostensible) authority (5 marks) b) Equality Ltd had three directors, Martin, Luther and King. King had always acted as managing director, although he was never officially appointed to the post. The other two directors were aware of the role King undertook and never sought to question this. King entered into a contract with The Brothers Ltd on behalf of Equality Ltd. When the other two directors, Martin and Luther, discovered that the contract was not favourable to the business interests of Equality Ltd they sought to avoid the contract on the grounds that King had no authority to enter into the contract with The Brothers Ltd. Discuss if Equality Ltd is bound by the contract King made with The Brothers Ltd