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Corporate Attribution and Agency: Back to Basics

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Worthington, S 


Stories of misbehaving corporate agents may add spice to the pages of law reports, but the relevant rules on corporate attribution and agency are usually presumed to be undisputed. Yet a number of these rules have become increasingly difficult to describe and apply. Three particular problems have emerged. The first concerns the headline issue of corporate attribution itself,1 and the question of whose acts should legitimately count as the acts of the company and for what purposes. The second concerns actual authority, and some of the peculiar ramifications of the modern orthodoxy that corporate agents have no actual authority to act contrary to the interests of their corporate principals. The third concerns ostensible authority, and the appropriate legal response to the problem of companies finding that junior employees have intimated to outsiders that a deal has been agreed when it has not. These three problems are neither trifling nor tangential: they concern issues which are fundamental to the proper analysis of a great deal of corporate activity. The three problems are considered in turn. Three key cases provide the core illustrations in the analysis which follows.2 Their careful dissection suggests that two particular failures lie at the heart of all the problems addressed here: the failure to pay due attention to the corporate form, and the failure to be specific about the precise context of corporate attribution. If these particular failures were addressed, this would have significant ramifications in several important areas of corporate law. The analysis advanced here would alter the current approach to the authority of misbehaving agents to bind their companies, clarify the role of “the Hampshire Land principle”,3 and have profound consequences for the application of the ex turpi causa defence against companies (regardless of the final shape of that defence). It would also assist in delivering more fitting remedies in claims brought by or against companies.



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Law Quarterly Review

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Sweet & Maxwell

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