Lloyd's Maritime and Commercial Law Quarterly
BREACH OF WARRANTY OF AUTHORITY IN MODERN TIMES
Francis Reynolds*
The action for breach of warranty of authority is unusual in that it imposed an action for a statement or conduct causing only economic loss as early as 1857, and a strict liability at that. It has been described as an island which the floods swept past. It is of importance in particular to solicitors, where it cuts across the idea that professionals are only liable for negligence; and a group of cases on steps taken in litigation without authority may or may not fit in with the general picture. Recent case law has both extended and limited the scope of the action and made it appropriate to consider how the principle links with negligence liability and whether this special instance of strict liability should
be retained at all.
In 1951 Mr Justice Fullagar of the High Court of Australia wrote, extradjudicially, of Collen v Wright,
1 the ancient and leading case on the contract of warranty of authority:
“Seen in retrospect, Collen v Wright looks like a curious island. If it had asserted liability for negligent, as well as fraudulent misrepresentations of authority, it could hardly have escaped immersion by Derry v Peek.[2] But because it placed the liability in the particular case on so high a ground, the flood swept past it and it escaped and grew” .3
Collen v Wright is of course the case in which the doctrine of breach of warranty of authority was in 1857 invented in common law. In it a land agent who had purported to sign a lease of a farm on behalf of a person who had not given him authority to do so, and who consequently refused to perform, was held liable to the third party irrespective of negligence. It was a simple situation in that the agent actually made a contract, or purported to do so, between the principal and an identified third party; though in other conveyancing situations the warranty might have to be that a deed is delivered with the authority of the principal, or something similar.4 The case involved creating a contractual liability for a particular sort of representation, and hence a strict liability. The decision was
* QC, DCL, FBA. Emeritus Fellow of Worcester College and Emeritus Professor of Law, University of Oxford. This is a revised version of the Ross T Parsons Lecture delivered in the Banco Court of the Law Courts at Sydney on 7 September 2011 while I had the privilege of being the McWilliam Visiting Professor of Commercial Law at the University of Sydney. I am much indebted to Professor G J Tolhurst and Professor J W Carter for hospitality and guidance. I have in this paper drawn on material on a similar subject which I delivered at the 13th Annual Lawyer’ s Liability Day at Gray’ s Inn on 10 October 2009, which is published beside a contribution of Mr Mark West, barrister, in (2009) 25 Professional Negligence 142, and I owe much, in that connection and more recently, to discussion with Mr William Flenley QC.
1. (1857) 7 E&B 647.
2. (1889) 14 App Cas 337.
3. “Liability for Representations at Common Law” (1951) 25 ALJ 278, 283.
4. See Bristol & West Building Soc v Fancy & Jackson [1997] 4 All ER 582, 613, per Chadwick LJ.
LLOYD’S MARITIME AND COMMERCIAL LAW QUARTERLY
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