Paul Bugden, Bugden + Co., London

Ref: Ivy Technology Ltd v Martin [2022] EWHC 1218 (Comm) Henshaw J.

The concept of agency is pervasive throughout the law of carriage of good in many different contexts. Central to agency in law is the conferral of authority by the principal on the agent to alter the legal relations of his principal with a third party in at least some way. An agent is never just an agent but always an agent to do something for someone (the principal) and the difficulty often is to identify precisely what that something is and who that someone is.

In the case of a freight forwarder who intends to act as forwarding agent demonstration of the conferral of authority by the customer to contract with a carrier to carry the goods is critical to the establishment of the role of agent to arrange so that the only contract to carry is that created between carrier and customer.[N1]

It is quite possible, and indeed common, that a freight forwarder might contract to arrange as agent some parts of the work involved in a movement whilst contracting to as principal contractor with regard to other aspects of the work including even some part of the carriage.

it is also possible of course for an agent to have authority to negotiate a transaction or compromise a claim or dispute or otherwise communicate in some way with third parties on his principal’s behalf without having any authority to conclude a contract for the principal; as in the case of a shipbroker who typically will not have his seller’s authority to bind the seller to a sale or charter.

In essence an agency relationship arises either; (a) by the conferral of authority through contract or otherwise by the principal on the agent, which may be express, or implied from the conduct or situation of the parties, or (b) retrospectively, by subsequent ratification by the principal of acts done on the principal’s behalf.

The question whether or not a particular relationship is that of agency depends upon what the parties have in substance agreed, rather than the label which they choose to place on it; UBS v Kommunale Wasserwerke Leipzig [2017] EWCA Civ 1567 para 87 cited in Zedra Trust [2019] EWHC 2191 (Comm) para 32.  What matters is not the parties’ subjective understanding but whether, objectively, authority has been conferred to act on the principal’s behalf; Freeman & Lockyer v Buckhurst Park Properties [1964] 2 QB 480 at 502-503.

Conferral of authority will be express where the principal appoints the agent, whether in writing or orally, to act as his agent and the agent acquiesces.  An agency relationship may however be implied in circumstances where one party has acted towards another in such a way that it is reasonable for that other to infer assent to an agency relationship from that conduct.

The conferral of agency authority does not have to be proved by direct evidence. It can be inferred from circumstantial evidence and that circumstantial evidence can include things said by the agent to the other party; Monde Petroleum SA v Westernzagros Ltd [2016] EWHC 1472 (Comm) para 203.

There are innumerable situations in which conferral of agency powers may be implied, though no authority was specifically given in fact. The most usual way in which this occurs is by an unwritten request, or by implication from the recognition by the principal of, or his acquiescence in, the acts of another. On the other side, the consent of the agent may be inferred from his acting on behalf of the principal; but the mere fact that he does what was requested by his principal does not necessarily mean that he does it on the principal’s behalf rather than simply for him.

The recent case of Ivy Technology, whilst not arising in the context of carriage of goods, contains some perceptive comments on when an agency relationship can be implied. It emphasises the difficulty in implying such a relationship where any such agreement or mutual intention, although consistent with an agency relationship, is not inconsistent with some other intended legal relationship.

In cases where there is no relevant express agreement, or objectively viewed mutual intention, so that the existence of an agency relationship is sought to be implied from conduct it must be fatal to the implication of an agency relationship if the parties would have or might have acted as they did in the absence of such a relationship; The Magellan Spirit [2016] 2 Lloyd’s Rep 1 para 29. As stated in UBS v Kommunale Wasserwerke the court should not impose an agency analysis upon a relationship which may better be analysed in other terms, in particular where the intermediary (in that case the car dealer) has its own interest in the transaction as principal.

Hence in these cases at least it is not enough to show conduct that is consistent with an agreement or mutual intention that a forwarder would contract as agent in relation to the relevant work. Rather it is necessary to identify conduct consistent only with such an agreement or mutual intention and inconsistent with that of the relationship of principal contractor.

Note 1: See generally Current Issues in Freight Forwarding: Law and Logistics, SIMONE LAMONT-BLACK, D RHIDIAN THOMAS eds Publication 2017 ISBN 978-1-9999710-0-7 and the chapter therein by the present writer.