Some wear and tear on Armagas v Mundogas: the tension between having and wanting in the law of agency

Abstract

In the decades following Armagas v. Mundogas, a leading case on some basic principles of agency law, the case has become surrounded by at least as many lukewarm lieutenants as stout defenders. There is in fact an understandable tension between not subjecting persons to transactions to which they have demonstrably not agreed and protecting the expectations of those who not unreasonably have trusted an intermediary accurately to report their principal’s willingness to transact. Protecting expectations, including “the security of contracting”, is generally more fashionable amongst lawyers now than it once was. This article addresses two of the holdings in Armagas (the need for a holding out by a (non-consenting) principal as to an agent’s authority before liability arises in either contract or the tort of negligent misstatement) and two of the dicta (being put on inquiry as to a lack of authority, and the unreliability of a course of dealing between the parties), and reviews the pronouncements of United Kingdom and England and Wales judges on each of them. The article seeks to reinforce Armagas on the first three, but not the last.