International Paper Co v Spicer

In *International Paper Co v Spicer*, the Full Federal Court considered a dispute arising from a contract for the sale of a business. The vendor, International Paper Co, sought to avoid liability under the contract, alleging that its agent, Mr. Spicer, had acted outside his actual authority in agreeing to certain terms. The core of the dispute concerned whether International Paper Co was bound by the contract as entered into by Mr. Spicer, despite secret instructions that purportedly limited his authority.

The Full Federal Court was required to determine whether Mr. Spicer possessed apparent authority to bind International Paper Co to the contract, notwithstanding any limitations on his actual authority communicated to him privately. This involved an examination of the principles of agency, particularly the distinction between actual and apparent authority, and the circumstances under which a principal can be held liable for the acts of its agent.

The Court applied the established principles of apparent authority, which arise when a principal represents to a third party that an agent has authority to act on their behalf, and the third party relies on that representation. The Court found that International Paper Co had clothed Mr. Spicer with the appearance of authority to negotiate and conclude the sale of the business. The existence of secret instructions limiting his actual authority did not, in the circumstances, negate the apparent authority upon which the purchaser had reasonably relied. Consequently, International Paper Co was bound by the contract as executed by Mr. Spicer.