Warranty of Authority

There may well be other requirements imposed as between the parties by other areas of law but what we are dealing with in this section are those rights and duties which are specific to the relationship of agent and principal. To exercise due diligence in performance of his duties often referred to as the agent’s fiduciary duty.  (fiduciary derives from the Latin word meaning  ‘trust’). To apply any special skills which he professes to have. To render account to the principal. Not to become a principal as against (in competition with) his principal. Not to make secret profits as against his principal. (NB In some countries this is also a criminal offence). When an agent deals on behalf of his principal, he is by implication warranting (or guaranteeing) to the third party that he has such represented authority. Where the agent exceeds his authority (both his actual and ostensible authority which he may in the circumstances have), or indeed where a person has no such principal, then he is breaching this implied warranty. In this situation it is the ‘agent’ who is making the representation of authority, who will be liable as against the third party. The action is based on the implied warranty made in the representation by the agent, and not for breach of the purported contract.