The claimant company Tube Tech International Ltd (Tube Tech) specialised in the cleaning of industrial pipe work and allegedly entered into four contracts for the cleaning of a natural gas plant in Nigeria with the first four defendants (TSKJ) who, it was claimed, was acting as a consortium.
The claim was for the unpaid balance invoiced under those four contracts plus interest. The defendants counterclaimed for breach of contractual condition as to provision of personnel.
TSKJ contended that neither individually nor collectively had they ever contracted as a consortium with any person, including the Tube Tech. TSKJ contended that Tube Tech contracted with the fifth defendant, LNG. The members of TSKJ controlled LNG.
The major issue in the case was the identity of the parties with which Tube Tech contracted.
The court examined the factual circumstances surrounding the formation of the contract, including the contractual documentation which passed between the parties and the evidence of the witnesses attending court.
The court rejected TSKJ’s submission that Tube Tech had contracted solely with LNG. Although the authorised signatories of LNG who signed the contract with Tube Tech did not have actual authority to sign such a contract on behalf of TSKJ, they had ostensible authority to do so because TSKJ had represented that LNG was entitled to contract on behalf of TSKJ in their dealings.
Accordingly the court found that TSKJ held out LNG as having authority to contract with Tube Tech on behalf of TSKJ. Tube Tech was entitled to judgement against TSKJ and the counterclaims against Tube Tech were dismissed.
*Full case details
Tube Tech International Ltd vs (1) Technip-Coflexip SA (2) Snamprogetti SPA (3) Kellogg Brown and Root Inc (4) JGC Corporation (5) LNG- Servicos E Gestao De Projectos Limitada, 12 January 2005, Queens Bench Division, Technology and Construction Courts, Judge Richard Havery QC
Contact Fenwick Elliott on 020 7421 1986 or NGould@fenwickelliott.co.uk
It was clear that the authorised signatories of LNG who signed the contract with Tube Tech did not have actual authority to sign such a contract on behalf of TSKJ.
However the principle of apparent or ostensible authority is often deployed by the courts to supplement the scope of actual authority of an agent where none existed.
The conduct of the consortium as principal in their dealings with Tube Tech was all-important in this case. In general, a principal should always be wary of making any representation to third parties that could have the effect of increasing the scope of the agent's authority.