Analysis of Watteau v Fenwick Case

Running head: CASE STUDY ANALYSIS
CASE STUDY ANALYSIS
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1CASE STUDY ANALYSIS
Introduction:
The present research project analyses the judgment given in Watteau v Fenwick case on
the basis of the facts of the case and addresses the liability of the undisclosed principal in the law
of agency1. In this case, it was held that a third party could make the principal liable whom he
did not know and with whom he did not contract the transaction also. Here the agent acted
outside the scope of duty entrusted to him by the principal. The Watteau v Fenwick case
provides a landmark decision on cases dealing with the interrelation between the principal,
agents and third parties. The project concentrates on maintaining of healthy relation between the
principal, agent and third parties. According to Joslin, Robert, and Ralf Müller (2016)2, in usual
course of business, principal can be held liable only when the third party is aware of the fact that
the agent is working on the principal and when the agent works according to the duties entrusted
to him by the principal. According to Kiefel, Susan (2018), the maxim followed in the law of
agency is ‘qui facit per alium per se’ which means one who acts through another does the act
himself34. However, there lies some exceptions to it. When the agent performs some act when he
is no longer enrolled as an agent, then the principal cannot be held liable. Moreover, the principal
cannot be held responsible when the agent acts beyond the duty he is assigned to. However, in
the case of Watteau v Fenwick, the court did not follow the usual course of law and made the
principal liable as per the responsibility of an undisclosed principal. Here, the court followed the
maxim strictly and thus the decision has been criticized.
1 Watteau v Fenwick [1893] 1 QB 346
2 Delreux, Tom, and Johan Adriaensen, eds. The Principal Agent Model and the European Union. Basingstoke:
Palgrave Macmillan, 2017.
3 Gray, Anthony. Vicarious liability: critique and reform. Bloomsbury Publishing, 2018.
4 Kiefel, Susan. "Vicarious liability in tort-a search for policy, principle or justification." Judicial Review: Selected
Conference Papers: Journal of the Judicial Commission of New South Wales, The. Vol. 13. No. 4. Judicial
Commission of NSW, 2018.

2CASE STUDY ANALYSIS
In this project, the different forms of authorities in an agency, limitation of apparent
authority, balancing the relation between agent and principal with third party along with critical
analysis of the given case have been discussed.
Discussion:
The project illustrates the provision related to principal- agent relationship in the light of
the book authored by Delreux, Tom, and Johan Adriaensen (2017)5. This relationship arises out
of an agreement where one party legally appoints another to act and perform on his behalf. It also
highlights that the principal and the third party in an agent-principal agreement must maintain a
fair and healthy relation in respect of all the transactions between them. Here the parties must not
have conflicts of interest while performing the act authorized to the agent by the principal. The
law of agency finds its application in the field of commercial law concentrating a bunch of
contractual, quasi-contractual and non-contractual fiduciary relationships that includes a person,
called the agent who has been authorized to perform the duties on behalf of the principal to
create legal relations with third parties. In this of relationship, the agent is treated equally to the
principal where the latter expressly or impliedly assigns an agent to work under his control.
Agency in British law is the child of UK Commercial law that is concentrated with the
application of agency law in UK and contains a set of regulations and procedures required for the
smooth running of the business. The European Communities in the year of 1986 enacted
Directive 86/653/EEC in this aspect. In UK, it was converted into the commercial national law in
5Delreux, Tom, and Johan Adriaensen, eds. The Principal Agent Model and the European Union. Basingstoke:
Palgrave Macmillan, 2017.

3CASE STUDY ANALYSIS
the Commercial Agents Regulations 1993. The agency law and the commercial law are designed
to realize the need of the commercial community, to safeguard the interest of the parties
associated to it and to provide them with remedies when their rights and interests are breached.
According to Mitnic (2015)6, under the principal-agent relationship, the agent is entrusted
with certain responsibilities by the principal, that is, there lies some reciprocal rights and duties
between them. An agent when acts within the ambit of the authority given to him by his
principal, then the former bind the latter with the responsibilities against the third person. There
are around three types of authorities recognized by law in agent principal relationship. According
to Muller (2017)7, these three types are the actual authority, apparent authority, emergency
authority and ratified authority.
Actual authority is generally two types, express and implied. Where the agent is
expressly given authority by the principal to act on his behalf, it is called express authority.
Implied authority means an authority which is implied by customs. Custom means the duties of
other agents in the same position. Here the principal is always bound by the agent’s act. In
apparent authority, the agents appear to be authorized but in practice he is not. The principal is
still bound by agent’s action. Moreover, the principal can be held liable for the agent’s act if the
conduct of the principal causes the third party to assume that the agent is authorized8. Authority
in emergency means in case of any emergency situation, an agent may be required to act beyond
his authority even if he is not entrusted by the principal to act so. Ratified authority means when
the principal has allowed the agent to go beyond his scope of duties. When the agent acts in this
6 Mitnick, Barry M. "Agency theory." Wiley encyclopedia of management (2015): 1-6.
7 Muller, Ralf. Project governance. Routledge, 2017.
8 Gray, Anthony. Vicarious liability: critique and reform. Bloomsbury Publishing, 2018.