Rederi Aktiebolaget Nordstjernan v. Chr. Salvesen & Co. [1903] ScotLR 40_305 (16 January 1903)

Rederi Aktiebolaget Nordstjernan v. Chr. Salvesen & Co. [1903] ScotLR 40_305 (16 January 1903)

An agent who, without authority, represents to their principal that a contract has been concluded and thereby induces the principal to act to their detriment is personally liable for the resulting loss. The measure of damages is the loss of profit from the unenforceable contract compared to the profit actually realised, plus reasonable expenses incurred in reliance on the misrepresentation. The absence of a signed charter-party does not preclude the existence of a binding contract if the parties' communications otherwise evidence agreement.

Citation
[1903] ScotLR 40_305
Parties
Pursuer: Rederi Aktiebolaget Nordstjernan; Defender: Chr. Salvesen & Company
Jurisdiction
Scotland
Judgment Date
16 January 1903
Procedural Posture
Civil / Appeal (reclaiming Motion) From Lord Ordinary to Inner House, Second Division
Outcome
interlocutor affirmed; appeal dismissed
Legal Topics
Agent's Liability for Misrepresentation, Measure of Damages for Breach of Warranty of Authority, Charter Party Formation, Offer and Acceptance, Principal Agent Relationship
Contract Law Agency Law Commercial Law Agent's Liability for Misrepresentation Measure of Damages for Breach of Warranty of Authority Charter Party Formation Offer and Acceptance Principal Agent Relationship

Case Brief

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Parties

Rederi Aktiebolaget Nordstjernan

Pursuer

Chr. Salvesen & Company

Defender

Procedural Posture

Civil / Appeal (reclaiming Motion) From Lord Ordinary to Inner House, Second Division

Legal Issues

  1. 1 Is an agent liable to their principal for damages resulting from a misrepresentation of authority to conclude a contract?
  2. 2 What is the proper measure of damages where an agent falsely represents authority to contract?
  3. 3 Does the absence of a signed charter-party preclude the existence of a binding contract?

Ratio Decidendi

An agent who, without authority, represents to their principal that a contract has been concluded and thereby induces the principal to act to their detriment is personally liable for the resulting loss. The measure of damages is the loss of profit from the unenforceable contract compared to the profit actually realised, plus reasonable expenses incurred in reliance on the misrepresentation. The absence of a signed charter-party does not preclude the existence of a binding contract if the parties' communications otherwise evidence agreement.

Court Disposition

interlocutor affirmed; appeal dismissed

Orders

  • Defenders (Chr. Salvesen & Co.) to pay pursuers (Rederi Aktiebolaget Nordstjernan) £450 sterling in damages with interest.
  • Defenders to pay expenses incurred by pursuers in raising and prosecuting the action against Messrs Ireland & Son, amount to be determined.