Trueman v Loder
Rule established
Termination of an agent's authority does not take effect against third persons until it becomes known to them. A principal remains bound to those who continue to deal with the former agent in ignorance of the revocation.
Facts
- The defendant was a merchant who conducted business in England through an agent.
- The agent habitually made contracts in his own name for the defendant's account, and the trade knew of this course of dealing.
- The agency was subsequently terminated.
- No notice of the termination was given to those who had been accustomed to deal with the agent.
- The agent continued to contract in the same manner as before.
- The plaintiff, unaware of the termination, contracted with the agent and sought to hold the principal liable.
Issue
- Whether a principal continues to be bound by contracts made by a former agent with third parties who had no notice of the termination of the agency.
Held
- Lord Denman CJ held the principal bound. Where a principal has held out a person as his agent and permitted a course of dealing on that basis, those who have been accustomed to deal with the agent are entitled to treat the authority as continuing until they receive notice to the contrary. Revocation as between principal and agent does not, by itself, affect third parties who deal in ignorance of it.
Ratio Decidendi
Authority which has been publicly represented must be publicly withdrawn. Until notice reaches those who have relied on the appearance of authority, the appearance persists and the principal remains estopped from denying it. Private revocation regulates the internal relationship only.
How to use it in an exam
- The standard authority reflecting S.208 of the Indian Contract Act, that termination does not operate against third persons until known to them.
- The practical lesson to state in answers: a principal revoking an agency must give notice to the agent and to those dealing with him.
- Closely related to apparent authority under S.237: the former agent has no actual authority, yet the principal is bound.
- The partnership analogue is the public notice requirement on retirement under S.32(3) of the Indian Partnership Act.
Source
Source: (1840) 11 Ad & El 589; 113 ER 539; authority on the need for notice of revocation to third parties; CITATION NOT CONFIRMED from a free source; check against Bowstead and Reynolds on Agency before exam use
This is an educational summary, not the judgment itself. Cite the reported version in professional or academic work.