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THE DOCTRINE OF APPARENT AUTHORITY IN ENGLISH LAW AND ITS APPLICATION IN APPROACHING VIETNAMESE CIVIL CODE 2015

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  • THE DOCTRINE OF APPARENT AUTHORITY IN ENGLISH LAW AND ITS APPLICATION IN APPROACHING VIETNAMESE CIVIL CODE 2015

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MINISTRY OF EDUCATION & TRAINING HO CHI MINH CITY UNIVERSITY OF LAW THE MANAGING BOARD OF SPECIAL TRAINING PROGRAMS  ĐẶNG HOÀNG NHÂN THE DOCTRINE OF APPARENT AUTHORITY IN ENGLISH LAW AND ITS APPLICATION IN APPROACHING VIETNAMESE CIVIL CODE 2015 BACHELOR’S THESIS CIVIL LAW FACULTY ACADEMIC YEAR: 2013 - 2017 HO CHI MINH CITY 2017 MINISTRY OF EDUCATION & TRAINING HO CHI MINH CITY UNIVERSITY OF LAW THE MANAGING BOARD OF SPECIAL TRAINING PROGRAMS  -ĐẶNG HOÀNG NHÂN THE DOCTRINE OF APPARENT AUTHORITY IN ENGLISH LAW AND ITS APPLICATION IN APPROACHING VIETNAMESE CIVIL CODE 2015 BACHELOR’S THESIS CIVIL LAW FACULTY ACADEMIC YEAR: 2013 - 2017 Supervisor Student Student’s code Class HO CHI MINH CITY 2017 Dr Nguyễn Hồ Bích Hằng Đặng Hồng Nhân 1353801011152 CLC38B DECLARATION OF AUTHORSHIP I hereby declare that the thesis has been composed by myself under my supervisor’s guidance and, to the best of my knowledge, that the work has not been submitted, in whole or in part, for any other degree or professional qualification I also warrant that the work has not been published in any form, which, if otherwise, shall be against my will and deemed as a violation under the laws Except where due references have been provided on all supporting literatures and resources, I confirm that the work submitted is entirely my own idea Ho Chi Minh City, 16 July 2017 INTRODUCTION CHAPTER AN OVERVIEW OF AGENCY AND APPARENT AUTHORITY IN ENGLISH LAW AND VIETNAMESE LAW 1.1 Theoretical approach of agency in English law and Vietnamese law 1.1.1 Definition of agency 1.1.2 Authority and different types of authority 14 1.1.3 Characteristics of agency 16 1.1.4 An introduction to the doctrine of apparent authority in English law 17 1.2 An overview of apparent authority in Vietnamese legislation 25 CONCLUSION OF CHAPTER I 29 CHAPTER PRACTICAL APPLICATION OF APPARENT AUTHORITY IN ENGLISH LAW – POINTERS FOR PROPER APPROACH IN THE CIVIL CODE 2015 30 2.1 Representation in English law and implication for the understanding of “fault” in the CC 2015 in relation to apparent authority 30 2.1.1 Representation in English Law 30 2.1.2 Fault element in the Civil Code 2015’s approach to apparent authority and suggestions for Vietnam 40 2.2 Reliance in English law and suggestions for duty to inquiry in the Civil Code 2015’s approach to apparent authority 44 2.2.1 Reliance in English law apparent authority 44 2.2.2 The standard of “did not known or could not have known” in the CC 2015 in comparison with reliance in common law 51 CONCLUSION OF CHAPTER II 56 CONCLUSION 57 APPENDIX 1: LIST OF AUTHORITIES 58 APPENDIX 2: LIST OF VIETNAMESE CASES 64 INTRODUCTION Rationale for the research In 2011, a deputy director of SeABank, a joint-stock commercial bank in Vietnam, signed a 150-billion bank guarantee for the issuance of bond of Megastar.1 Relying on such guarantee, Vinaconex-Viettel (“VVF”) agreed to buy Megastar’s bonds When the payment was overdue, Megastar was unable to conduct the payment, resulting in the fact that VVF came to SeABank for such loan SeABank refused to execute the bank guarantee by relying on Decision 693, an internal agreement which provided that such deputy director was only authorized to sign any bank guarantee which did not exceed VND 30 billion SeABank thus refused to be bound by that bank guarantee Was VVF supposed to be aware of the existence of such internal Decision at 693 and whether it has the right to assume the proper authority of the deputy director? Are we required by the law to take due care and inquiry into the internal regulation of a commercial bank when transacting with them or, in a less complicated but more frequent circumstances, are we obliged to inquire about the authority of the cashier when going to a convenient store? At that time, the Civil Code 2005 (“the CC 2005”), which was the primary legislation governing agency relationship, turned out to be a gray area in relation to such issue This case, albeit drawing an incredible controversy and public awareness, was just tip of the iceberg since it was far from rare in reality.2 Agency is widely understood as the situation where a person, called the principal, extends his existence by conferring his power upon another person, called the agent, to enter into transactions with a third party In the modern world, it is hardly possible to imagine daily commercial operation taking place without the use of agent Agency helps to eliminate the limitation on the capacity of traders, allowing them to conduct business or enter into contracts with less efforts and time From a director of a listed company to a cashier in a convenient store, the use of agent is so indispensable that people most of the time not bother to question its See more at: Nguyen Minh Duc, Nhan vien lam, doanh nghiep co phai chiu? (Do enterprises take responsibility for its employees‘ conduct?) http://www.thesaigontimes.vn/137686/Nhan-vien-lam-doanhnghiep-co-phai-chiu.html (Last visited 1st June 2017) Do Van Dai (2013), Luat Hop Dong Viet Nam – Ban an va binh luan ban an, Volume 1, 4th edition, Chinh Tri Quoc Gia Publisher, pp.193-194 validity.3 Agency thus plays a significant role in our daily life while is likely to put contracting parties in certain degree of risk The transaction entered into by the agent and the third party shall be binding upon the principal if the agent is acting within his authority In most of jurisdictions, the authority conferred upon the agent by the principal is divided into actual authority and apparent authority The latter describes the situation when the third party reasonably assumes that the agent has proper authority to contract with him Such assumption is protected by law for the sake of stability of commercial practice since business entities and their customers most of the time rely on apparent authority.4 In the corporate world, the role of apparent authority is deemed more important, and somewhat more challenging, since outsider contracting parties are most vulnerable due to the lack of information regarding the internal management rules of the corporate contracting party In this regard, the law must simultaneously protect the right of business entities to conduct their daily commercial operation through their authorized agents, whereas taking into account the rights and interests of third parties After a long time of being ignorant of the existence of apparent authority, the Civil Code 20155 (“CC 2015”), as a result, takes a milestone step by adding the doctrine of apparent authority, which is believed to strengthen the role of law of agency Although the intake of other doctrine from another country with different legal family through legal transplant is not a new phenomenon in the past decades in Vietnam, the understanding and application of those foreign-origin doctrine has never been easy In case of apparent authority, the challenge is more intensive since the CC 2015 just came into effect on 1st January 2017 and sub-law documents, as well as jurisprudence, to give directions for the new issues of such doctrine are not available Consequently, there is an urgent need to study this legal institution in the CC 2015 to provide a comprehensive framework for practical application Paula J Dalley (2011), A Theory Of Agency Law, University Of Pittsburgh Law Review, Vol 72, p 497 Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] QB 480; Andrew S Gold and Paul B Miller (2014), Philosophical Foundations of Fiduciary Law, Oxford University Press, p 331 The Civil Code 2015 was passed by the National Assembly on 24 November 2015 and came into effect on July 2017 Apparent authority is a popular doctrine in common law jurisdictions and owes its origin to the English legal system.6 Therefore, it is surely of significant use to study how the doctrine is treated in English law for suggestions in Vietnam Justification for the choice of English law as a comparative subject is enhanced by the following reasons: (i) Apparent authority is a legal doctrine which has a long-standing position in the history of English law Albeit well-developed, the doctrine is still subject to enhancement through case law and the inter-application of different common law countries7 to adapt with the invariably changing commercial business Therefore, the source for research into apparent authority in English law is immense and sustains the development of various legal systems in relation to this legal institution (ii) For a new legal institution, it is of essence to scrutinize it through not only doctrinal approach but also its practical impact on civil transactions Since the doctrine of apparent authority is primarily formed through case law and legal research of highly publicist, the study of apparent authority in English law thus makes mammoth contribution to how the new legal institution should be construed in the CC 2015 and applied in reality For the above reasons, the topic of “The Doctrine of Apparent Authority in English Law and its application in approaching Vietnamese Civil Code 2015” is what the author choose to elaborate in his bachelor’s thesis 2.1 Literature review Vietnamese materials The textbook “Giao trinh Nhung van de chung ve luat dan su” of Ho Chi Minh University of Law provides a basic understanding of Vietnamese law of agency, from a characteristics of agency relationship to the establishment of authority under the CC 2005 The book does not provide the notion of apparent Kenneth R Williams (1973), Apparent Authority in a Civil Law Jurisdiction, Louisiana Law Review, Vol.33, No.4, p.735 In some common law countries, English precedents are either binding upon the courts there or of highly persuasive value For instances, in Singapore, English precedents has a strong influence on the decision of Singaporean courts and are usually cited as highly persuasive source See details in: Kevin Tan (1999), The Singaporean Legal System, NUS Press, p.241 In Hong Kong, Article 84 of the Basic Law provides that the Hong Kong courts may refer to case precedents from other countries under common law jurisdictions authority, it yet serves as a tool for supporting the basic understanding of the author in relation to the agency area and The book “Luat Hơp Dong Viet Nam - Ban an va binh luan ban an” of author Do Van Dai: in this book the author points out the shortcomings of the institution of agency in the CC 2005 through practical judicial precedents and explains the need to adopt the doctrine of apparent authority into the new Civil Code In his latest book “Binh luan nhung diem moi cua Bo luat dan su 2015”, apparent authority is asserted to be adopted into the CC 2015 The former book also introduces the concept of apparent authority in Canadian legal system, it does not, however, provide guidance on the application of such new provisions Neither these books clarify the components of apparent authority nor offer a fully explored comparative study with a common law country Article “Dai dien be ngoai nhin tu goc phap luat dan su Nhat Ban” of author Nguyen Thi Phuong Cham in Luat hoc Journal, No.6/2016 is one of few published law journals that provides an analysis on the doctrine of apparent authority in the CC 2015, especially through the comparative study with apparent authority in Japanese Law The author raises her concern over whether the understanding of apparent authority in the CC 2015 is alike, or consistent, with that of customary understanding and of Japanese Law Of particular note, the article suggests another approach other than fault-based and peculiarly applicable in the context of apparent authority in commercial and corporate practice Although the doctrine of apparent authority has not been fully explored in Vietnam, these materials still play a significant role in forming the foundation of the fundamental knowledge regarding the law of agency so that the author can be inspired and proceed on the next research 2.2 International materials Due to a long-standing history of development, law of agency in general and apparent authority in particular has drawn a great interest of academic scholar in common law system Their researches play indispensable parts in the contribution to the author understanding of the topic The two most popular sources are books and law review Among these, it is worth mentioning the following researches: The book “Commercial Law: Text, Cases and Materials” of LS Sealy and RJA Hooley presents a “comprehensive and accessible guide” to the understanding of commercial law in England With respect to law of agency, the most valuable reference is that the book provides two ways of defining agency, one is consent-based approach and the other is based upon power-liability doctrine These approaches are studied with a view to justifying the recognizing of different types of authority, including apparent authority In relation to the application of apparent authority, this research covers a wide range of some specific characteristics of apparent authority, especially the pros and cons of the conventional view of English courts On that basis, the research provides a mandatory and reliable source of for studying apparent authority in English law The book “Commercial Law” of Eric Baskind, Greg Osborne and Lee Roach provides a coherent and in-depth understanding of how law of agency is perceived in English legal system With respect to apparent authority, the book fully explored its components Especially, for the first requirements of the apparent authority to be established, namely the representation, the book instructs the reader to study it by answering questions: What must this representation indicate? From whom must this representation derive? How must the representation be made? When must the representation be made? Commentaries on judicial precedents in this book played a major role in the author’s perception of the development of apparent authority in English law The book “Agency: Law and Principles” fully analyses law of agency, embodying the doctrine of apparent authority, through the case law and commentaries of common-law scholars In particular, the book deals with the operation of apparent authority in major commercial sectors This book is a mustread for those who are studying the concept of law of agency in general and apparent authority in particular in English law The book restricts its scope within the area of one jurisdiction and not provide a comparative perspective with another jurisdiction, which the author of this thesis shall conduct Restatement (Second) of Agency and its successor Restatement (Third) of Agency are two sets of collected principles issued by American Law Institute These two versions are intended to clarify the prevailing opinion in the area of law of agency standing in each period of time in the United States These Restatements reflect the intake of US law from the doctrine in English law and shows some major changes in comparison with the view of English courts Thereby the two Restatements provides the author with a comparative perspective when studying apparent authority Article “Agency Law and Contract Formation” of Eric Rasmusen advocates the conclusion that the law of agency, including the doctrine of apparent authority, is justified by the least-cost-avoider principle The principle is an effective assistant in providing justification for different types of authority, including apparent authority The mentioned sources provides a basic understanding and application of law of agency and apparent authority in English law Unfortunately, none of these researches elaborates on the comparative study between the concept in English law and in Vietnamese law Objective and delimitation of the research The ultimate objective of this research is to fully explore the doctrine of apparent authority in terms of both theoretical basis and practical application in English law, thereby making suggestion as to the proper understanding and application of such institution in the CC 2015 In order to accomplish this objective, the author intends to go through two steps: First, the author shall seek the doctrine’s definition and analyze the requirements for the establishment of apparent authority In each requirement, the author will go from its general characteristics to exceptions, and wherever possible, give comment on the approach of the scholars and judicial bodies Secondly, on the basis of the findings in step one, the author shall attempt to adopt the English law’s application of the doctrine in interpreting the institution of apparent authority in the CC 2015 It is the intention of the author that the thesis shall be mainly confined to the doctrine of apparent authority in English law However, due to the worldwide influence of judicial precedents of English legal system upon other common law countries, the author also seeks to look beyond the territory of English law to study the doctrine in the United States and Australia, especially the three versions of Restatement of Agency Such reference should not be deemed as to shift the focus of this thesis from English law As the research elaborates on the doctrine of apparent authority, all contents which are related to agency by operation of law and actual authority shall be For a long time, Turquand had played a major role in protecting innocent third party when dealing with a company before the doctrine of apparent authority is well-developed.142 In English law, the importance of the rule is now diminished as it is superseded by Section 40 of the Companies Act 2006.143 b Section 40 of the Companies Act 2006 as a replacement for indoor management rule In the Companies Act 2006, the ability of directors to bind the company in a transaction is provided under Section 40 as follows: ―(1) In favor of a person dealing with a company in good faith, the power of the directors to bind the company, or authorize others to so, is deemed to be free of any limitation under the company‘s constitution (2) For this purpose— (a) a person ―deals with‖ a company if he is a party to any transaction or other act to which the company is a party, (b) a person dealing with a company— (i) is not bound to enquire as to any limitation on the powers of the directors to bind the company or authorize others to so, (ii) is presumed to have acted in good faith unless the contrary is proved, and; (iii) is not to be regarded as acting in bad faith by reason only of his knowing that an act is beyond the powers of the directors under the company‘s constitution (3) The references above to limitations on the directors‘ powers under the company‘s constitution include limitations deriving— (a) from a resolution of the company or of any class of shareholders, or (b) from any agreement between the members of the company or of any class of shareholders‖ With the assertion in Section 40(1) of the Companies Act 2006, the constructive notice doctrine is abolished and Turquand rule is not necessarily 142 John Lowry, Arad Reisberg (2012), Pettet‘s Company Law: Company Law and Corporate Finance, 4th edition, Pearson Longman, p 133; Sarah Worthington, supra note 48, p 117 143 The Companies Act 2006 is an Act of the Parliament of the United Kingdom which forms the primary source of UK company law Full text of the legislation: http://www.legislation.gov.uk/ukpga/2006/46/contents (Last visited 15 July 2017) 50 invoked when the third party is trying to demonstrate that his reliance was legitimate It is interesting to realize that when the third party is contracting with a company, he is not under the law to be assumed to have read the constitution of the company, even though under the Companies Act 2006, the right to access to company’s constitution is guaranteed by Section 1065 of as follows: ―Any person may require the registrar to provide him with a copy of any certificate of incorporation of a company, signed by the registrar or authenticated by the registrar‘s seal‖ One might question if there is an overprotection for the third party while the law seems to make itself less balanced against the corporate contractor According to a commentator, due to the complexity of commercial practice and hierarchy structure in corporate entities, the need to protect the honest man or innocent third party is dominant and thus well deserves a more special treatment than in the case of apparent authority in mere civil relationship.144 Moreover, even in the case of having access to the corporate’s document is possible, parties can hardly ask for the grant of such access, which otherwise can be much less costly and time-consuming if the corporate principal publicly announce the restriction in the first place according to the least-cost-avoider principle The only requirement applicable to the third party is he must act “in good faith” and the company bears the burden of proof to prove otherwise (the third party is presumed to have acted in good faith unless the contrary is proved) It denotes that when dealing with a corporate entity, the third party is not required to take a due inquiry into the actual authority of the apparent agent However, when he is put on notice, such in the cases as he knows the transaction is being made not in or against the commercial interest of the company, or, he is not allowed to rely on representation given by the apparent agent 2.2.2 The standard of “did not known or could not have known” in the CC 2015 in comparison with reliance in common law 2.2.2.1 The standard of “did not know or could not have known” 144 Nguyen Thi Phuong Cham, supra note 79, pp 85-86; Thanakharn Kasikorn Thai Chamkat (Mahachon) v Akai Holdings Ltd (in liquidation) [2010] HKCFA 64; Nigel Banerjee (2013), Ostensible authority - the scope of the reliance requirement, reachable at http://www.jordanpublishing.co.uk/practiceareas/company/news_and_comment/ostensible-authority-the-scope-of-the-reliancerequirement#.WUYN8pCg_IV (last visited 18 June 2017) 51 Unlike common law where the standard of “could not have known” is resolved by the “reasonable person” test,145 which means that “all matters throwing light upon what a reasonable person in the position of the third party at the time of acting would consider are to be given due weight”,146 there exists no similar standard in the law of Vietnam for reference when interpreting what “could not have known” means.147 The legal query is that whether the standard of could not have known is equitably applied to all people and to all types of transaction, or the standard varies in accordance with each person, taking into account their expertise, skill, education background, and each type of transaction In judicial practice, in terms of agency-related dispute, the court seems to take the view of constructive notice in common law For instance, in Judgment No 03/2012/KDTM- ST dated 21 March 2011, a construction contract was entered into by head of a branch of the defendant The branch’s head falsely claimed that he was authorized by the defendant to enter into the contract The claimant sought to enforce the contract and required the defendant to hand over the premises and pay the compensation for illegal takeover The defendant argued that the head of the branch did not have the authority to enter into the contract and the defendant never knew about the contract until the dispute arouse In its decision, the court upheld the defendant’s argument by declaring the contract at issue void When determining fault of each party that led to the contract being void, the court found that both parties were at fault on the account that: (i) the head of the branch was aware that the parent company did not authorize him to enter into such contract but he still did so; (ii) the claimant could have had the right to inquire the power of attorney for verification of the branch’s scope of authority, but he did not bring any effort to so The reasoning of the court seemed absurd and confusing in such a way as it sought fault from the head of the branch after concluding that the defendant in this case should be the parent company Regarding the second reasoning, the court 145 W H Van Boom (2005), Unification of Tort law, Kluwer Law International, p 222; Bede Harris (2015), “Third Party Suspicion of Lack of Authority on the Part of Company Agents – A Comparative Study and a Suggested Rule”, Journal of Politics and Law; Vol 8, No 2, pp 99-100 146 American Law Institute (2008), Restatement (Second) of Agency, William S Hein & Company, Section 34 147 Truong Nhat Quang, supra note 35, pp.200-201 52 opined that it was the duty of a contracting party to take its effort to inquire the confirmation whether its partner has been duly authorized or not In Judgment No 05/2011/KDTM-ST, the disputed contract is about asset leasing The manager of the defendant entered into a contract to lease a part of the area of land that the defendant was using in exchange for a loan from the claimant which was equivalent to billion VND In one of its arguments, the defendant asserted that its manager was not authorized to entered into any loan contract of which the value exceeded 500,000,000 million VND, according to an internal record of the Board of Directors before then The court rejected such argument of the defendant by invoking 96.1(dd) of the Enterprise Law 2005 which indicates that only the General Shareholder’s Meeting can be entitled to alter the company’s constitution, thus the internal meeting minute of the Board of Directors had no legal validity The reasoning of the court, albeit rejected the effect of the internal record of the Board of Directors, gave rise to inference that in agency-related dispute, the company’s documents of incorporation and their amendments shall be taken into account Intriguingly, judicial practice in this regard draws a wave of inconsistency In a collection of arbitral practices published by Vietnam International Arbitration Centre, it is recorded that internal documents of company, including company’s constitution is not used against the third contracting party.148 For example, in a request for setting aside an arbitral award, the petitioner relied on its constitution which provided that “all the disputes arising out of the commercial activities of the company within the territory of Vietnam shall be resolved at the competent court in accordance with the laws of Vietnam” The court rejected this ground for setting aside the arbitral award as the constitution, as an internal document of the company, shall not affect the outsider.149 This view is supported by Article 144.1 of the CC 2005 which provides that “the legal representative has the right to enter into, execute all civil transactions for the benefits of the principal unless otherwise prescribed by the laws” In this case, the company’s constitution did not have such 148 Vietnam International Arbitration Centre (2015), Giai quyet tranh chap hop dong – Nhung dieu doanh nhan can biet, Tri Thuc Publication, pp 35-39 149 Id., p 36 53 legal effect as that of the laws, thus it could not be relied on to restrict the authority of the legal representative From the mentioned judicial practices, it seems that the phrase “could not have known” is likely to be perceived as the third party should have done anything accessible to them by fact or by law to verify the authority of the agent In the author’s view, this way of interpretation is not supported by neither civil nor commercial transaction practice The author opines that the duty to inquiry should not depend on the accessibility of the information, rather it is the practice of a particular type of transaction that should be contemplated For instance, in a merely civil transaction of sales of house and land use right, the buyer shall check with competent authority about the legal status of the object as well as the actual authority of the seller by requiring the power of attorney or both signatures of the spouses in the event of common marital properties The buyer acts as a common practice of that type of transaction would entice him into Nevertheless, transacting with a branch of a major commercial bank is a different matter Innocent third party is not required to bring himself to the knowledge of the internal compliance of the company, at least in the common practice of banking sector, not to mention in some cases they cannot have access to those internal documents.150 According to an author, the standard of “ought to have known” denotes that “any person under that kind of circumstances shall be aware of the lack of proper authority”.151 The author of this research agree upon this view, further clarifying that two elements should be taken into account: (i) type of the transaction at issue (value of the transaction, position of the agent); and (ii) capability of the third party (including but not limited to his expertise, experience in that kind of transaction, educational background, etc.) 2.2.2.2 Suggestions for Vietnam In light of the above analysis, it is advisable that the standard of awareness of the third party in apparent authority, contained in the phrases “did not know or could not have known” should be construed as below: Generally, the third party is assumed to act in good faith and thus can rely on the assumption that the apparent agent is acting within his actual authority, 150 151 Truong Nhat Quang, supra note 35, p.184 Truong Nhat Quang, supra note 35, pp.200-201 54 unless the circumstances of the transaction give rise to the suspicion of otherwise Those signals can be: (i) the third party has actual knowledge of the actual authority of the apparent agent; (ii) the apparent agent is not acting in the interest or acting against interest of the principal; and (iii) the apparent agent is not acting within the usual authority of his position Particularly, in the context of transactions to which a corporate entity is a party, the other party should not be assumed to have read any internal document of the company, including the constitution regardless of their accessibility The phrase “could not have known” does not necessarily mean that the third party would have accessed to the accurate information had it acted at best efforts, the third party rather only needs to act in good faith in such a way as he will be put on notice to inquire more verification in case there is any signal as set forth above 55 CONCLUSION OF CHAPTER II In English law, the doctrine of apparent authority is built upon two elements: (i) representation; and (ii) reliance Respectively, the CC 2015 adopts apparent authority through (i) fault of the principal; (ii) standard of “did not know or could know have known” of the third party For the first element, the forms of representation in English law may be (i) expressly words or conducts of the principal; (ii) implied from previous dealings between parties; (ii) implied from the principals’ conduct, usually by putting the agent in a position that carries the usual authority of such position; and (iv) inaction of the principal Respectively, the CC 2015 provides fault of the principal as the first element of apparent authority In the author’s view, fault-based approach is inappropriate as it puts too much harsh burden of proof on the third party In order to resolve such the discrepancy, the author reckons that there needs to be distinction between the fault in general civil liability and the fault in Article 142.1(c) and 143.1(c) of the CC 2015 Accordingly, fault in such articles are presumed from the principal’s conducts which cause reasonable belief from the third party The scenarios in which the fault of the principal is assumed are the four scenarios listed in the English case laws For the second element, the third party cannot claim to have acted upon the representation above if (i) the third party in fact knows about the agent’s lack of due authority through a reliable information; (ii) the transaction is not made for the interest of the principal; and (iii) the transaction does not fall within the usual authority of the agent’s position The CC 2015 imposes the standard of ―did not know or could not have known‖ in determining whether the third party can invoke the agent’s apparent authority Unfortunately, the current legislation does not provide any clarification over this standard, which the author opines that the said standard should be interpreted on a case-by-case basis At principal, the third party is not required to be put on notice and to take due inquiry, unless the surrounding circumstances of the transaction at issue give rise to his reasonable suspicion that the agent lacks proper authority Such circumstances are elucidated by the three most popular scenarios recorded in English case laws 56 CONCLUSION The analysis of this research demonstrates that apparent authority is a common legal doctrine existing in most of developed jurisdictions as well as international instruments In English law, the doctrine of estoppel by representation and objective contract/agency theory place two different justifications for the foundation of apparent authority Either way, apparent authority is established when there is representation from the principal and reliance from the third party Judicial precedents in English law have set out circumstances under which the words, conducts or inaction of the principal constitute representation and those under which the third party cannot rely on such representation without taking further verification The Civil Code 2015’s adoption of apparent authority is a positive and appreciable step from the legislators However, unlike English law, the legislators of the Civil Code 2015 approach this doctrine through the fault of the principal and the duty to inquiry from the third party These discrepancies, without further direction from sub-law documents or jurisprudence from the People’s Supreme Court are likely to create unnecessary impediment over the effect of this legal institution In the issuance of such direction, it is advisable that the competent authorities should take into account the need to protect innocent third party and put the burden on the party who can have the more effective tools to prevent the invalidity of contracts The author is of a firm belief that the doctrine of apparent authority deserves more dedicated works from legal scholars in Vietnam other than this research In the process, it is of importance to learn this newly adopted institution through a doctrinal basis that is likely to be accepted in Vietnam rather than through a mere research into the current legislation, so that such provisions can sustain different types of civil transactions and the complexity of commercial practice 57 APPENDIX 1: LIST OF AUTHORITIES A LEGAL DOCUMENTS VIETNAMESE LEGAL DOCUMENTS The Civil Code 2005 (Law No 33/2005/QH11) dated 14 June 2005 The Civil Code 2015 (Law No 91/2015/QH13) dated 24 November 2015 The Enterprise Law 2014 (Law No 68/2014/QH13) dated 26 November 2014 Decree 04/2013/ND-CP providing guidance on the Law on Notarization Decree 03/2006/HDTP guiding the application of the Civil Code 2005 on non-contractual damage Circular 05/2015/TT-BTC providing guidance on information disclosure on stock-exchange market ENGLISH ACT B The Companies Act 2006 REFERENCES VIETNAMESE MATERIALS Dai hoc Luat Thanh Ho Chi Minh (2014), Giao trinh Phap luat ve hop dong boi thuong thiet hai ngoai hop dong, Hong Duc Publisher Do Van Dai (2014), Luat Boi thuong thiet hai ngoai hop dong – Ban an va Binh luan ban an, National Ho Chi Minh University Publisher 10 Do Van Dai (2014), Luat Hop Dong – Ban an va Binh luan ban an, Volume 2, 4th edition, Chinh tri Quoc gia Publisher 11 Hoang The Lien (2009), Binh Luan Khoa Hoc Bo Luat Dan Su Nam 2005, Chinh Tri Quoc Gia Publisher 12 Nguyen Thi Phuong Cham (2016), Dai dien be ngoai nhin tu goc phap luat dan su Nhat Ban, Luat hoc Journal, No.6/2016 13 Truong Nhat Quang, Phap luat ve doanh nghiep – Nhung van de co ban, Dan Tri Publisher 14 Vietnam International Arbitration Centre (2015), Giai quyet tranh chap hop dong – Nhung dieu doanh nhan can biet, Tri Thuc Publisher 58 FOREIGN MATERIALS 15 American Law Institute (2008), Restatement (Second) of Agency, William S Hein & Company 16 American Law Institute (2008), Restatement (Third) of Agency, William S Hein & Company 17 Andrew S Gold, Paul B Miller (2014), Philosophical Foundations of Fiduciary Law, Oxford University Press 18 Bede Harris (2015), “Third Party Suspicion of Lack of Authority on the Part of Company Agents – A Comparative Study and a Suggested Rule”, Journal of Politics and Law; Vol 8, No 19 Bernard Joseph Rubenstein (1958), “Apparent Authority: An Examination of a Legal Problem”, American Bar Association Journal, Vol 44 20 Brian M Studniberg (2014), Revisiting the Self-Authorizing Agent, Ottawa Law Review, Vol 44, No 21 Daniel S Kleinberger (2008), Agency, Partnerships, and LLCs: Examples and Explanations, Aspen Publishers Online 22 Danny Busch and Laura Macgregor (2007), Apparent Authority in Scots Law: Some International Perspectives, Edinburgh Law Review, Volume 11, No 23 Danny Busch, Laura J Macgregor (2009), The Unauthorised Agent: Perspectives from European and Comparative Law, Cambridge University Press 24 David Kershaw (2012), Company Law in Context: Text and Materials, Oxford University Press 25 Deborah A DeMott, Defining Agency and its Scope (II), in Comparative Contract Law: A Tale of Two Legal Systems 396-413 (Martin Hogg & Larry A DiMatteo eds., 2016) 26 E H Hondius (2004), Towards a European Civil Code, Kluwer Law International 27 Eric Baskind, Greg Osborne, Lee Roach (2016), Commercial Law, Oxford University Press 28 Ewan McKendrick (2014), Contract Law: Text, Cases, and Materials, Oxford Universtiy Press 59 29 GHL Fridman (1996), The Law of Agency, 7th edition, LexisNexis Butterworths 30 Gualtiero Procaccia (1976), “On The History Of Agency”, Tel Aviv University Studies In Law, Volume 31 International Institute for the Unification of Private Law (2010), UNIDROIT Principles of International Commercial Contracts 2010 32 J A Hornby (1961), “The Usual Authority of An Agent”, The Cambridge Law Journal, Vol 19, No 33 J Hynes, Mark Loewenstein (2011), Hynes and Loewenstein's Agency, Partnership, and the LLC in a Nutshell, 5th edition, West Academic 34 J M Smits (2006), Elgar Encyclopedia of Comparative Law, 2nd Edition, Edward Elgar Publishing 35 John Cartwright (2006), “Protecting Legitimate Expectations and Estoppel in English Law”, Electronic Journal of Comparative Law, Vol 10.3 36 John Lowry, Arad Reisberg (2012), Pettet‘s Company Law: Company Law and Corporate Finance, 4th edition, Pearson Longman 37 Kenneth R Williams (1973), “Apparent Authority in a Civil Law Jurisdiction”, Louisiana Law Review 38 KOH, Pearlie and BULL, Stephen (2013), Agency and Partnership Law, Singapore Academy of Law Annual Review of Singapore Cases, Volume 14 39 Kevin Tan (1999), The Singaporean Legal System, NUS Press 40 Larelle Chapple, Phillip Lipton (2002), Corporate Authority and Dealings with Officers and Agents, Centre for Corporate Law and Securities Regulation and CCH Australia Limited 41 LS Sealy & RJA Hooley (2003), Commercial Law: Text, Cases and Materials, 3rd edition, LexixNexis Butterworths 42 M A Clarke, R J A Hooley, R J C Munday, L S Sealy, A M Tettenborn, P.G Turner (2017), Commercial Law: Text, Cases, and Materials, Oxford University Press 43 Michael Conant (1968), “The Objective Theory of Agency: Apparent Authority and the Estoppel of Apparent Ownership”, Nebraska Law Review, Vol 47, No 60 44 Ole Lando & Hugh Beale (2000), Principles of European Contract Law, Kluwer Law International 45 Paula J Dalley (2011), “A Theory of Agency Law”, University Of Pittsburgh Law Review, Vol 72:495 46 Richard Freer, Douglas Moll (2013), Freer and Moll's Business Organizations (Concise Hornbook Series), West Academic 47 Robert James Gerstung, “Delivery to Imposters May be Effective: Apparent Authority of Estoppel? - Regal Shop Co v Legum Co.”, Maryland Law Review, Vol 16, Issue 48 Robin Edwards (2001), “The Liggett Defence and Apparent Authority”, Hong Kong Law Journal, Vol 31, No 49 Roderick Munday, Roderick J C Munday (2010), Agency: Law and Principles, Oxford University Press 50 Roman Tomasic, Stephen Bottomley, Rob McQueen (2002), Corporations Law in Australia, Federation Press 51 Roy Goode (2004), Commercial Law, 3rd edition, Penguin Group 52 Sean Wilken, Karim Ghaly (2012), The Law of Waiver, Variation and Estoppel, Oxford University Press 53 Sergey Budylin, A Comparative Study in the Law of the Ostensible: Apparent Agency in the U.S and Russia, International Trade Law Journal, Vol 16, No 54 Stephen Bainbridge (2014), Agency, Partnerships and LLCs, 2nd edition (Concepts and Insights Series), West Academic 55 Warren A Seavey (1920), “The Rationale of Agency”, The Yale Law Journal, Volume 29, No 56 William Bowstead, Peter George Watts, Francis Martin Baillie Reynolds (2012), Bowstead and Reynolds on Agency, Sweet & Maxwell 57 William Gregory (2007), Law of Agency and Partnership, 3rd edition (Hornbook Series), West Academic MISCELLANEOUS 58 59 http://www.thesaigontimes.vn https://www.en.wikipedia.org 61 60 61 http://www.law.justia.com http://www.investopedia.com 62 63 http://www.bailii.org https://www.high-court-justice.vlex.co.uk 64 http://www.jordanpublishing.co.uk LIST OF CASES ENGLISH 65 Armagas Ltd V Mundogas SA (The Ocean Frost) CA [1986] AC 717 66 Attorney General of Ceylon v Silva 1953] AC 461, [1953] WLR 1185 67 Criterion Properties Plc v Stratford UK Properties LLC and Others: HL 17 Junes 204 68 First Energy v Hungarian International Bank [1993] BCC 533 (CA) 69 Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] QB 480 70 71 72 73 74 75 76 George Whitechurch Ltd v Cavanagh [1902] AC 117, 135 Heinl and Others V Jyske Bank (Gibraltar) LTD: CA September 1999 Hopkins v TL Dallas Group Ltd [2004] EWHC 1379 (Ch) ING Re (UK) Ltd v R&V Versicherung AG [2006] EWHC 1544 (Comm) Northfolk CC v Secretary of State for the Environment [1973] WLR 1400 Overbrooke Estates V Glencombe Properties [1974] WLR 1335 (Ch) Paul Quinn v CC Automotive Group Ltd t/a Carcraft [2010] EWCA Civ 1412 77 Pickering v Busk, 1812, 15 EAST 38 78 Royal British Bank v Turquand (1856) E&B 327 79 Sea Emerald SA v Prominvestbank Joint Stockpoint Commercial Industrial & Investment Bank [2008] EWHC 1979 (Comm) (Queen's Bench Division, Commercial Court) (Andrew Smith J) (11 August 2008) 80 Summers v Salomon (1857) E&B 879 81 United Bank of Kuwait v Hammoud [1988] WLR 1051 (CA) 1066 62 82 Wrexham Association Football Club Ltd v Crucialmove Ltd [2006] EWCA Civ 237 83 Yasuda Fire & Marine Insurance Co of Europe Ltd v Orion Marine Insurance Underwriting Agency Ltd [1995] QB 174 (QB) 185 HONG KONG 84 Thanakharn Kasikorn Thai Chamkat (Mahachon) v Akai Holdings Ltd (in liquidation) [2010] HKCFA 64 SINGAPORE 85 27 Viknesh Dairy Farm Pte Ltd v Balakrishman s/o P S Maniam [2015] SGHC UNITED STATE 86 Hoddeson v Koos Bros, 135 A 2d 702 - 1957 VIETNAM 87 88 89 Judgement 23/2011/KDTM-ST dated 30 September 2011 Judgement 03/2012/KDTM- ST dated 21 March 2011 Judgement 05/2011/KDTM-ST dated 23 May 2011 63 APPENDIX 2: LIST OF VIETNAMESE CASES 64 ... law? ??s application of the doctrine in interpreting the institution of apparent authority in the CC 2015 It is the intention of the author that the thesis shall be mainly confined to the doctrine of. .. are intended to clarify the prevailing opinion in the area of law of agency standing in each period of time in the United States These Restatements reflect the intake of US law from the doctrine. .. apparent authority in English law The book “Agency: Law and Principles” fully analyses law of agency, embodying the doctrine of apparent authority, through the case law and commentaries of common-law
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