Case Number:
CA 1903
Equivalent Citation:
[1903] 1 K.B. 81
Bench:
Collins, M.R. and Methew, J.
Decided on:
19 November 1902
Relevant Act:
The Partnership Act 1890
Brief Facts and Procedural History:
In this case the defendant company is a partnership company with two partners, Mr Houston and Mr Strong, who represented the company. Mr Houston took care of the functioning of the company and Mr Strong was a sleeping partner. Mr Houston, acting within the scope of his authority, bribed the clerk of the plaintiff’s company and induced him to commit a breach of contract with the plaintiff as a result of which the clerk divulged some of the secret, important information of the plaintiff’s company. This act of Mr Houston was done without Mr Strong’s knowledge. The information was used by Mr Houston in a way to make the plaintiff company, his competitor, suffer the loss. Plaintiff sued both the partners of the defendant company for breach of contract under vicarious liability. The trial court said that both the partners are liable for breach of the contract. The case went to the Court of Appeal.
Contention:
- Whether or not Mr Houston acted within the scope of his authority in obtaining the details of the plaintiff company?
- Whether or not Mr Strong is liable for the wrongful act committed by Mr Houston?
The ratio of the Case:
The defendant’s counsel argued that gaining information about your competitor’s business is something that a businessman can do and hence, it is legal. So, what Mr Houston did is legal and that he is not liable for the breach of contract. The court agreed with this argument of the defence counsel and stated that Mr Houston acted as an agent and it is done within the scope of his authority, it is illegitimate and amounts to a breach of contract. This was based on the board risk principle, according to which if the principal is the one who will benefit from the acts of the agent, then he is also liable for the risks the agent goes through, while he is performing the acts delegated to him. In this case, the clerk was an agent of Mr Houston and so he is liable for the risk the clerk incurred, that is, the breach of contract, while delivering the information Mr Houston has asked for.
The decision of the Court:
The Court of Appeal upheld the order of the trial court and said that both the partners of the defendant company, Mr Houston and Mr Strong, are guilty of inducing breach of contract, even though it was committed by only one of them.
This case comment is written by Santhiya V, a 3rd year BBA LLB (Hons.) studying at Alliance University.
Editor- Deeksha Arora
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