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Ben Jones
Ben Jones, UK Lawyer
Category: Law
Satisfied Customers: 50165
Experience:  Qualified Solicitor
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There has been a business to business contract signed by

Customer Question

hi there has been a business to business contract signed by an employee in our company but she had not authority to make a deal with the company, we have had no previous dealings with them. Our employee has sought the company and there services out off her own back, a cancellation call was made by the employee but agreed to another trial period, the trial has now ended and the company id demanding payment which our director refuses to pay can you please advise me on this
Submitted: 2 years ago.
Category: Law
Expert:  Ben Jones replied 2 years ago.
Hello, my name is***** am a qualified solicitor and it is my pleasure to assist you with your question today. Did she agree cancellation rights?
Customer: replied 2 years ago.
i am not sure what that is
Expert:  Ben Jones replied 2 years ago.
Ok can you please explain in some more detail the nature of the contract and how it came into existence. Thank you
Customer: replied 2 years ago.
the contract was for an online human resource service. the service provides documentation to use when dealing with HR. Our employee looked up the company and agreed to the free trial and signed a contact in august. The trial had not been used and our employee called to cancel the trial. She then agreed to a documentation only trial which was also unused. Our company director was only aware of this due to the invoices being sent to us.
Expert:  Ben Jones replied 2 years ago.
Thank you for your response. I will review the relevant information and will get back to you as soon as possible.
Please do not respond to this message as it will just push your question to the back of the queue and you may experience delays.
Expert:  Ben Jones replied 2 years ago.
Many thanks for your patience. This situation concerns what is known as ‘apparent authority’, where an agent of a company enters into an agreement when they may not have the express authority to do so, but nevertheless the other side believed that they did and enters into a contract based on that presumption.
The leading case on the subject is Racing UK Ltd v Doncaster Racecourse Ltd and another. I will not go over all of the facts as you can just read them on this summary page:
You can see that the facts are similar – an employee of the Council had entered into an agreement with Doncaster when they did not have the authority to do so.
What the court decided is that the Doncaster agreement was binding on the Council. On the evidence, there was nothing which would lead to a reasonable inference that the Council had authorised the employee to act on its behalf in entering into the agreement. However, there was representation to Doncaster that the employee had apparent or ostensible authority to sign the agreement with and the company had relied on that representation, so the employer would have been liable for the contract.
As you can see, this is quite fact specific so it does not mean that any such agreement will be legally binding and only a court can decide that by looking at the facts of the case. So you can challenge it by denying the employee had authority, although the other party could try and challenge it as above.
I hope this has answered your query. I would be grateful if you could please take a second to leave a positive rating (3, 4 or 5 stars) as that is an important part of our process and recognises the time I have spent assisting you. If you need me to clarify anything before you go - please get back to me on here and I will assist further as best as I can. Thank you
Expert:  Ben Jones replied 2 years ago.
Hello, I see you have read my response to your query. Please let me know if this has answered your original question or if you need me to clarify anything else for you in relation to this? If your query has been dealt with please take a second to leave a positive rating by selecting 3, 4 or 5 starts from the top of the page. If you need further help please get back to me on here and I will assist as best as I can. Thank you.
Customer: replied 2 years ago.
Hello, you have told me what i already knew, only court can give a definite answer. Thank you for your time.
Expert:  Ben Jones replied 2 years ago.
Well I have provided case law and told you what a court would look at but the reality is that if challenged, neither side can force a successful resolution without the involvement of a court.